Less Bureaucracy, Better Student Aid Act

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.