Warren, Merkley, Booker, Van Hollen Question ED Secretary McMahon on Lack of Transparency, Guardrails for $1 Billion Student Loan Administration Fund

Warren, Merkley, Booker, Van Hollen Question ED Secretary McMahon on Lack of Transparency, Guardrails for $1 Billion Student Loan Administration Fund September 3, 2026 “(T)he agency has displayed a worrying lack of public transparency about what this vast sum of money has been spent on or will be spent on in the future.” Text of Letter (PDF) Washington, D.C. — U.S. Senators Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) raised their concerns in a letter to Department of Education (ED) Secretary Linda McMahon about ED’s use of the $1 billion that Republicans’ One, Big, Beautiful Bill Act (OBBBA) allocated to ED for student loan administration. Senators Cory Booker (D-N.J.) and Chris Van Hollen (D-Md.) joined the letter as well. Student loan borrowers are facing the largest default and delinquency crisis in recorded history. While OBBBA allocated $1 billion to be used to cover “administrative costs” of the federal student loan program, the law created no accountability, oversight, or transparency measures regarding how the money is spent. ED has reported that it spent approximately $216 million of this fund by the start of Fiscal Year 2026, but it has not disclosed to the public what it has spent this money on or its future plans for the fund, leaving borrowers, advocates, and lawmakers in the dark. “While ED has disclosed that it has already spent hundreds of millions of dollars from the fund, the agency has displayed a worrying lack of public transparency about what this vast sum of money has been spent on or will be spent on in the future,” wrote the senators . In addition to pushing for increased transparency regarding the student loan administration fund, the senators urged Secretary McMahon to use the money to address the ongoing student loan default crisis , such as by expanding outreach to borrowers at risk of defaulting or who have already defaulted, improving Federal Student Aid customer service, and rehiring ED’s servicer oversight team to ensure that servicer errors do not raise the risk of default. “ED should spend the money on whatever measures are necessary to address the default crisis by bringing borrowers out of default and preventing additional borrowers from defaulting,” wrote the senators . The senators asked McMahon to provide answers to their questions regarding how ED has used — and intends to use — this $1 billion fund no later than September 16, 2026. Senator Warren has led the fight to make our higher education system more affordable, cancel student loan debt, and hold student loan servicers accountable for incompetence and malfeasance. She launched the Save Our Schools campaign in a coordinated effort to fight back against President Trump’s attempts to abolish the Department of Education: On August 27, 2026, Senators Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) led a group of senators in investigating federal student loan servicer MOHELA on the company’s plans to address the false delinquency notices that it reportedly sent to numerous student loan borrowers. On July 30, 2026, the Senate Health, Education, Labor, and Pensions (HELP) Committee’s bipartisan 21-1 vote to advance Senators Elizabeth Warren (D-Mass.) and Bill Cassidy’s (R-La.) College Transparency Act out of committee, Senator Warren released the following statement . On July 21, 2026, Senator Elizabeth Warren (D-Mass.) introduced the Accreditation Reform and Enhanced Accountability Act of 2026 (AREAA) . The legislation would take steps to reduce student debt and protect students and taxpayers by reforming higher education accreditation and centering student outcomes and consumer protection. On July 16, 2026, at a hearing of the Senate Finance Committee , U.S. Senator Elizabeth Warren (D-Mass.) pressed Francis Brooke, nominee to be Deputy Secretary of the Department of the Treasury, to answer basic questions about the largest student loan default crisis in recorded history, which the Treasury Department has now inherited as part of President Trump’s efforts to dismantle the Department of Education. Mr. Brooke was unable to answer questions about the size of the default crisis and potential effects on Social Security benefits for seniors with defaulted loans. On July 6, 2026, in response to a May 2026 request from U.S. Senator Elizabeth Warren (D-Mass.), the Government Accountability Office (GAO), an independent government watchdog, confirmed it would investigate whether the Trump administration’s dismantling of the Department of Education (ED) is harming ED’s ability to root out waste, fraud, and abuse of Title IV financial aid funds. On June 8, 2026, Senators Warren (D-Mass.) and Merkley (D-Ore.), along with Representatives Pressley (D-Mass.) and Carson (D-Ind.), led 62 members of Congress in pressing the Department of Education to immediately address the largest student loan default and delinquency crisis on record, which has been made worse by the Trump administration’s policies. On May 28, 2026, in resp