Senators demand accounting of Education Department's $1B loan administration funds
Four Democratic senators sent a letter to Education Secretary Linda McMahon requesting details on how the department spent $1 billion allocated for student loan administration under the One Big Beautiful Bill Act. The lawmakers noted that only about $215.5 million of the funds had been spent as of October, and they asked for an itemized breakdown by Sept. 16. The letter comes amid rising student loan delinquency rates.
The letter follows the Education Department’s own fiscal 2027 budget request, which showed that as of October 2025, only about $215.5 million of the $1 billion OBBBA allocation had been spent, with over $452 million projected to remain unspent by September 30. The senators specifically asked whether funds went to loan servicers, the Treasury interagency agreement, or Federal Student Aid outreach to delinquent borrowers.
The request arrives as New York Fed data shows 10.6% of student loan balances were at least 90 days past due in the second quarter of 2026, up from 10.3% in the prior quarter. Total outstanding student debt reached $1.65 trillion. The department is also transitioning borrowers out of the SAVE plan, with over 7.5 million enrollees facing automatic reassignment to plans that could raise monthly payments.
This scrutiny could shape public trust in federal loan management, particularly for the millions of borrowers facing repayment changes. If funds remain underused while delinquency rises, borrowers may face higher costs or confusion, and lawmakers could push for tighter oversight or policy adjustments. The outcome may influence how effectively the department handles the SAVE plan transition and whether default rates stabilize, affecting household finances and broader economic stability.