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  5. Key student-debt relief programs are at risk if Congress doesn't boost Education Department funding, 25 Democratic lawmakers say

Key student-debt relief programs are at risk if Congress doesn't boost Education Department funding, 25 Democratic lawmakers say

Ayelet Sheffey   

Key student-debt relief programs are at risk if Congress doesn't boost Education Department funding, 25 Democratic lawmakers say
  • Sen. Elizabeth Warren led a group of Democrats in pushing for increased Federal Student Aid funding.
  • They said that key student-debt relief programs, like SAVE, are at risk without more resources.

A group of Democratic lawmakers is pointing to one key thing that will help student-loan borrowers and families navigate financial aid: more funding.

On Wednesday, Massachusetts Sen. Elizabeth Warren led 24 of her Democratic colleagues in calling on Sens. Tammy Baldwin and Shelley Moore Capito — chair and ranking member of the Senate appropriations subcommittee for education funding, respectively — to grant President Joe Biden's $2.7 billion budget request for the Office of Federal Student Aid in fiscal year 2025.

Over the past couple of years, Biden has requested that Congress provide increased funding to FSA to help it facilitate the return to student-loan repayment, the rollout of the new Free Application for Federal Student Aid, or FAFSA, form, and a host of new repayment and debt relief programs.

However, Republicans have opted to flat-fund the agency, and this year, they proposed funding cuts. The Democrats wrote in their letter, first viewed by Business Insider, that the lack of funding is "severely undermining FSA's ability to implement critical programs."

"FSA's responsibilities have increased to protect students and borrowers, but its federal funding has remained stagnant," they wrote. "The lack of adequate resources creates more barriers for students to start and continue their education."

Since federal student-loan payments resumed in October, many borrowers have faced a list of challenges, including hours-long hold times with their servicer, payment inaccuracies, and delayed or missing billing statements.

On top of that, the Education Department has been working to carry out a series of reforms to the Public Service Loan Forgiveness program, it implemented the new SAVE income-driven repayment plan, and it's in the process of overhauling the student-loan servicing system.

Each of those efforts requires more resources to implement effectively — something servicers themselves have previously acknowledged when explaining their own challenges in assisting borrowers.

When it comes to the FAFSA, both Republican and Democratic lawmakers have been highly critical of the way the Education Department has facilitated the rollout. While the department intended to create a simplified form for families and students, technical glitches delayed the form by months, and aid calculation errors followed, forcing many schools to push back their commitment deadlines.

Just one day before the Democrats' letter, a bipartisan group of lawmakers sent a letter to Education Secretary Miguel Cardona requesting that the department ensure the FAFSA form is ready, without errors, for students to access as they apply for aid for the next school year. The Democrats wrote in their Wednesday letter that FSA needs more funding to live up to that commitment.

Cardona also expressed the need for Congress to boost the Education Department's funding in written testimony for a Tuesday hearing before the House. He wrote that Biden's $2.7 billion request for FSA will allow the agency to "support students and student loan borrowers as they navigate these modernized financial aid application and student loan repayment processes."

The Education Department is also in the process of crafting its broader student-debt relief plan, which is currently in the public comment period. The department plans to begin implementation of the new debt relief this fall, but the presidential election — and likely legal challenges — present uncertainty to that timeline.

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