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Bill

HR 9609

Less Bureaucracy, Better Student Aid Act

119th Congress Introduced by Tim Walberg

Transfers all federal student loan functions from the Department of Education to the Department of the Treasury, consolidating management of loans, debt, and aid programs.

Committee Consideration and Mark-up Session Held
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Bill Summary · HR 9609

Overview

  • Bill: HR 9609
  • Session: 119th Congress
  • Title: Less Bureaucracy, Better Student Aid Act
  • Purpose: Transfer all federal student loan functions from the Department of Education to the Department of the Treasury, to consolidate management of federal student loans, federal student debt, and policies on student aid eligibility. The bill sets out a staged transfer of specific loan servicing, collections, and related functions and directs subsequent administration by the Treasury.

What the bill would do

  • Transfer of Functions (Section 2)

    • Move to the Department of the Treasury:
    • Servicing and collections of defaulted federal student loan debt (including debt certification, due process, borrower notification, disputes, bankruptcy, rehabilitation, consolidation, repayment agreements, and credit reporting) previously carried out by the Department of Education.
    • Servicing of non-defaulted federal student loan debt (including borrower notification, processing of payments, repayment plan administration, consolidation, disputes, and credit reporting).
    • All remaining functions related to those transferred items that remain after the above transfers, including administrative provisions, lender/institution requirements, and programs such as:
      • Federal Pell Grants
      • Federal Supplemental Educational Opportunity Grants
      • Federal Family Education Loan program
      • Federal Work-Study
      • William D. Ford Direct Loan program
      • Federal Perkins Loans
      • Need Analysis
      • General Student Assistance Provisions
      • Eligibility and Certification Procedures
      • Health Education Assistance Loan program
    • Subsection (b) outlines a phased implementation with effective dates to be determined by the Secretaries of Education and Treasury.

  • Administrative and Operational Provisions (Sections 3–7)

    • Section 3: Treasury Secretary may use authorities under other law to perform transferred functions.
    • Section 4: Transfer of personnel, assets, liabilities, contracts, records, and unexpended balances to Treasury; funds to be used for their original purposes.
    • Section 5: Oversight by the Director of the Office of Management and Budget (OMB) to ensure no net increase in federal full-time equivalent employees; may determine and adjust function boundaries and perform incidental transfers to implement the act.
    • Section 6: Treasury Secretary may delegate transferred functions to Treasury personnel, with continued Treasury responsibility for administration.
    • Section 7: References in other laws to the Department of Education shall be deemed as references to the Department of the Treasury for transferred functions.

  • Savings and Transition (Sections 8–10)

    • Section 8: Savings provisions to preserve valid legal documents, ongoing proceedings, and suits; continuation of orders, appeals, and payments as if the act had not been enacted, with modifications as permitted.
    • Section 9: Termination of any exemption from the Debt Collection Improvement Act; delinquent or defaulted student loan debt would no longer be exempted from standard debt collection requirements.
    • Section 10: Transition authority for Treasury to use Education Department personnel, assets, and funding as needed to implement the transfer.

  • Definitions (Section 11)

    • Defines “function” broadly to include duties, powers, responsibilities, rights, programs, and related activities.

Who would be affected

  • Federal student loan borrowers and debtors (defaulted and non-defaulted) as the servicing and debt collection responsibilities move from Education to Treasury.
  • Department of Education staff, assets, and funds tied to the transferred functions would become Treasury resources.
  • Institutions, lenders, and program administrators connected to Federal Pell Grants, SEOG, FFEL, Direct Loans, Perkins Loans, Work-Study, and related student-assistance programs, as defined, would be subject to Treasury administration for the transferred elements.
  • Several federal programs that support student aid would shift administrative oversight and requirements to the Treasury, including eligibility and certification procedures.

Procedural and timeline aspects

  • Effective dates for transfers: To be jointly determined by the Secretaries of the Treasury and Education, with staggered dates corresponding to the three transfer categories (defaulted debt servicing, non-defaulted debt servicing, and remaining functions).
  • Transition period: Treasury may utilize Education Department personnel and assets for a reasonable period to facilitate orderly implementation.
  • Oversight and reporting: OMB Director must certify compliance with the transfer on each effective date and ensure no net increase in federal FTEs due to the act.
  • Continued legal validity: Existing orders, proceedings, and suits related to transferred functions may continue with adjustments as allowed by the act; the act provides continued operation under the new administrator.

Potential impacts to watch

  • Operational disruption during the transition, including payroll, IT systems, and contract administration.
  • Changes in policy interpretation and borrower communication standards under Treasury administration.
  • Impacts on consumer protections, due process, and credit reporting for student loan borrowers during and after the transfer.
  • Budgetary and personnel implications across Treasury and Education, particularly any reallocation of funds and workforce.

Note: The summary reflects the bill text and stated provisions. As introduced, the bill would require significant administrative changes and careful implementation to maintain continuity of student aid programs and borrower protections.

Compiled from official sources — confirm details with the bill’s official record.

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