H.R. 9609
Less Bureaucracy, Better Student Aid Act
Sponsor: Tim Walberg
1 cosponsor
Official summary
Written by the Congressional Research Service.
Less Bureaucracy, Better Student Aid Act
This bill transfers specified functions relating to federal student aid from the Department of Education (ED) to the Department of the Treasury.
Specifically, the bill transfers to Treasury all the functions and authorities exercised by ED related to servicing and collections of defaulted federal student loan debt, servicing of non-defaulted federal student loan debt, and other specified programs (e.g., Federal Pell Grants and Federal Direct Loans). ED and Treasury must jointly determine effective dates for these transfers in accordance with the bill's requirements. (On March 19, 2026, ED announced an interagency agreement with Treasury for Treasury to assume operational responsibility for collecting on defaulted federal student loans, while ED must maintain its statutory responsibilities.)
Additionally, the bill transfers to Treasury all personnel and appropriations related to the functions that are transferred under this bill.
The bill outlines the authority of the Office of Management and Budget (OMB) related to the functions that are transferred under this bill, including that OMB must ensure that this bill does not create a net increase in full-time equivalent employees at Treasury or ED. Further, OMB must certify compliance with the bill to specified congressional committees.
The transfer of these functions does not affect any suits, proceedings, or applications for benefits, services, licenses, permits, certificates, or financial assistance that are pending on the date of this bill's enactment.
The bill also terminates the authority to exempt delinquent or defaulted federal student loans from the Debt Collection Improvement Act.
Text of the bill
(a) In general. There are transferred, in accordance with the applicable effective dates in subsection (b), to the Department of the Treasury—
(1) functions of the Secretary of Education (including the performance-based organization established pursuant to section 141 of the Higher Education Act of 1965 (20 U.S.C. 1018) and all related functions of any officer or employee of the Department of Education) related to the servicing and voluntary and involuntary collections of defaulted Federal student loan debt, including certification of debt, due process, borrower notification, disputes, bankruptcy, rehabilitation, consolidation, compromise, repayment agreements, and credit reporting;
(2) functions of the Secretary of Education (including the performance-based organization established pursuant to section 141 of the Higher Education Act of 1965 (20 U.S.C. 1018) and all related functions of any officer or employee of the Department of Education) related to the servicing of non-defaulted Federal student loan debt, including borrower notification, processing of payments, repayment plan administration, consolidation, disputes, and credit reporting; and
(3) all functions of the Secretary of Education (including the performance-based organization established pursuant to section 141 of the Higher Education Act of 1965 (20 U.S.C. 1018) and all related functions of any officer or employee of the Department of Education) that remain after the transfer of functions required under paragraphs (1) and (2) with respect to each of the following:
(A) Administrative Provisions for Delivery of Student Financial Assistance under part D of title I of the Higher Education Act of 1965 (20 U.S.C. 1018 et seq.).
(B) Lender and Institution Requirements Relating to Education Loans under part E of such title (20 U.S.C. 1019 et seq.).
(C) Federal Pell Grants under subpart 1 of part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a et seq.).
(D) Federal Supplemental Educational Opportunity Grants under subpart 3 of such part A (20 U.S.C. 1070b et seq.).
(E) Federal Family Education Loan program under part B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.).
(F) Federal Work-study programs under part C of such title (20 U.S.C. 1087–51 et seq.).
(G) William D. Ford Federal Direct Loan program under part D of such title (20 U.S.C. 1087a et seq.).
(H) Federal Perkins Loans under part E of such title (20 U.S.C. 1087aa et seq.).
(I) Need Analysis under part F of such title (20 U.S.C. 1087kk et seq.).
(J) General Provisions Relating to Student Assistance programs under part G of such title (20 U.S.C. 1088 et seq.).
(K) Eligibility and Certification Procedures under subpart 3 of part H of such title (20 U.S.C. 1099c et seq.).
(L) Health Education Assistance Loan program as provided in part A of title VII of the Public Health Service Act (42 U.S.C. 292 et seq.).
(b) Effective dates
(1) Effective dates determined. The Secretary of Education and the Secretary of the Treasury shall jointly determine effective dates for the transfers required under subsection (a), in accordance with paragraph (2) of this subsection.
(2) Applicable effective dates. The transfers required under subsection (a) shall take effect as follows:
(A) Paragraph (1). With respect to the transfers required under paragraph (1) of subsection (a), on the effective date determined in accordance with paragraph (1) that is on or after the date of enactment of this Act.
(B) Paragraph (2). With respect to the transfers required under paragraph (2) of subsection (a), on the effective date determined in accordance with paragraph (1) that is on or after the effective date described in subparagraph (A).
(C) Paragraph (3). With respect to the transfers required under paragraph (3) of subsection (a), on the effective date determined in accordance with paragraph (1) that is on or after the effective date described in subparagraph (B).