Policy- Seventeen Democrats wrote a letter to lawmakers asking them to increase Federal Student Aid funding.
- The Democrats said lack of funding is "catastrophic" for millions of borrowers relying on relief.
A group of Democrats wants to make sure the Federal Student Aid office gets the funding it needs next year.
On Monday, 17 Democratic lawmakers, including Sens. Elizabeth Warren and Bernie Sanders, sent a letter to Chair and Ranking Member of the Senate Appropriations subcommittee Tammy Baldwin and Shelley Moore Capito, respectively. They called on the subcommittee to provide $2.7 billion in funding for FSA in fiscal year 2024, consistent with President Joe Biden's budget request. The letter comes after Congress did not increase funding for the agency this year.
The Democrats wrote that fulfilling Biden's budget request is "particularly critical given that FSA's FY 2023 funding was stagnant from the previous year, which severely undermines FSA's ability to implement critical programs" like reforms to Public Service Loan Forgiveness, income-driven repayment plans, and President Joe Biden's broad plan to cancel up to $20,000 in student debt.
"FSA and its services will be expected to communicate important timelines, provide an accessible call center service, answer questions from millions of borrowers, and accurately process extensive paperwork to ensure a smooth transition for borrowers back into repayment," the lawmakers wrote.
"The Department of Education has projected that without additional loan relief, ending the payment pause will result in a devastating spike in delinquencies and defaults," they continued. "However, that projection would understate the catastrophic consequences for millions of working and middle-class Americans if FSA also lacks sufficient funding to provide the outreach and servicing needed to assist borrowers simultaneously needing to navigate the requirements and options for starting payments."
They noted that Congress flat-funding FSA for 2023 could lead to "severe implementation delays" with a series of programs related to FAFSA. They also expressed concerns that the lack of additional funding would impair FSA's ability to implement its fresh start program effectively, which is intended to restore seven million borrowers in default to good standing before they have to enter repayment.
As the lawmakers referenced, FSA has a lot on its plate. After two conservative-backed lawsuit's paused the implementation of Biden's broad debt relief plan, Biden extended the student-loan payment pause through 60 days after June 30, or 60 days after the Supreme Court issues a final decision on the legality of the relief, whichever happens first.
That means that millions of borrowers will reenter repayment this year with or without relief, and on top of all of that, the department wants to move forward with other targeted reforms — to which the lack of FSA funding has already presented issues. As Insider reported last month, the Education Department pushed back the deadline for borrowers to see a one-time adjustment to their accounts, which was part of the IDR and PSLF overhaul the department announced last year.
Specifically, the one-time account adjustment would give borrowers in those programs one more chance to have their payments updated if there were any inaccuracies, but new FSA guidance said the adjustment would not happen until 2024, rather than the initial estimate of July 2023. More funding will be key to speeding up those processes.
"The lack of adequate resources creates more barriers for students to continue their education," the lawmakers wrote. "We believe this funding request is needed to provide FSA with the resources it needs to fulfill its goal of ensuring that all eligible students and families can access federal student grants, loans, and work-study funds to pursue education and training beyond high school."