Student-loan forgiveness and cheaper monthly payments are on the line as the GOP's plan to slash Education Department funding moves forward
House Republicans proposed a bill to cut funding for the Education Department.
It would strain already tight resources to facilitate the new income-driven repayment plan.
It could also heighten repayment challenges like poor customer service.
Funding cuts could be coming for the Education Department, and key programs for student-loan borrowers are at risk.
So far, the House Appropriations Committee has passed seven of its 12 bills to fund federal agencies in the upcoming fiscal year. The committee released details for one of the remaining bills — the Labor, Health and Human Services, Education, and Related Agencies bill — and the proposed budget cuts are significant.
When it comes to Federal Student Aid specifically, which oversees student-loan repayment and servicing, the committee's cuts could put programs many borrowers rely on at risk. The committee wants to fund FSA at $1.8 billion, which is $264 million below its current level and nearly $884 million below what Biden requested.
The committee targeted a range of the Education Department's recent initiatives to provide relief to borrowers, including streamlining the process for borrower defense to repayment, which is a program that allows borrowers to file claims if they believe they were defrauded by the school they attended, and if approved, their loans would be wiped out. The GOP lawmakers said their bills includes legislative language "prohibiting funding" for improving that process.
Similarly, the committee said it would not include more funding to facilitate the department's new SAVE income-driven repayment plan intended to make monthly payments cheaper for borrowers.
These funding cuts would come just over a month into federal student-loan borrowers' return to repayment after an over three-year pause. In October, borrowers' bills starting becoming due again, and millions of them have been faced with a range of errors including late billing statements and inaccurate information on their accounts.
Both servicers and the Education Department have previously noted that increased funding for FSA is crucial to ensure there are sufficient resources to manage the unprecedented transition back into repayment. The GOP appropriations lawmakers, however, wrote that the "Department diverted taxpayer resources for its partisan, costly student loan policies, when it needed to be preparing for an orderly resumption of Federal student loan payments."
"The Department repeatedly delayed the return to loan repayment, which generated uncertainty and undermined a timely and orderly restart of loan payments," they wrote.
Top Republican on the House education committee Virginia Foxx also previously told Insider she did not think FSA needed more funding to ensure things run smoothly for borrowers, saying that "the department needs to live within its means and be fortunate that it has the funding that it has right now because every department in the federal government is overfunded, in my opinion."
Regardless, the issue of funding remains a top concern. Deputy Under Secretary of Education Ben Miller said during a debt relief negotiation session on Tuesday that "the department's been seeking funding increases for Federal Student Aid and we are not in the position where we have significant resources to add large numbers of staff, either in house or on a contract basis, to do lots of additional work streams."
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