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

“[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 response to a request from Senator Warren (D-Mass.), the Government Accountability Office (GAO), an independent government watchdog, confirmed the expansion of its investigation into the Department of Education’s (ED) transfer of critical programs to other agencies through interagency agreements (IAAs), including the transfer of student loan default collections to the Department of the Treasury. GAO previously confirmed it had initiated an investigation into ED’s transfer of grant programs for career and technical education and adult education to the Department of Labor. On May 21, 2026, Senator Elizabeth Warren (D-Mass.) asked the Government Accountability Office (GAO) to open a new investigation into 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 May 4, 2026, U.S. Senator Elizabeth Warren (D-Mass.) released new responses from the Department of Education and the Treasury Department demonstrating that the agencies cannot articulate a clear purpose or plan for implementing their illegal interagency agreement (IAA) transferring the administration of federal student loans to the Treasury. On April 28, 2026, Senators Warren (D-Mass.) and Bernie Sanders (I-Vt.) pressed the Consumer Financial Protection Bureau’s new Student Loan Ombudsman , Geoffrey Gradler, on his plan to protect student loan borrowers, especially given his past censorship of a key student loan report at the CFPB and his background as a lobbyist for lenders. The senators also asked him to recuse himself from past clients’ matters that might come before his office at the CFPB. On April 2, 2026, Senators Warren, Sanders, Wyden, Murray, and Baldwin—all top Democrats on influential education committees—pressed Secretary of Education Linda McMahon and Secretary of the Treasury Scott Bessent to rescind their plans to move the administration of federal student loans to the Treasury Department, the latest move in the Trump administration’s attempts to dismantle the Department of Education. On February 23, 2026, Senators Elizabeth Warren and Bernie Sanders, along with Representative Ayanna Pressley, released a response from the Department of Education to their November letter regarding a potential sale of the federal student debt portfolio. In the response, ED confirms for the first time publicly that they are weighing a sale of the federal student loan portfolio. On February 19, 2026, Senators Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) pushed Education Secretary Linda McMahon on concerns that the U.S. Department of Education is apparently obstructing Congressional efforts to hold federal student loan servicers accountable for underperformance. On February 2, 2026, Senator Warren released a new report revealing the findings of their investigation into how private student loan lenders will reap the benefits from cuts to federal student loan access enacted in Republicans’ Big, Beautiful Bill (OBBBA). The report is the first Congressional analysis of the impacts of the OBBBA’s student loan restrictions on the private lending market. On January 22, 2026, Senators Elizabeth Warren, Jeff Merkley (D-Ore.), Sheldon Whitehouse (D-R.I.), and Tim Kaine (D-Va.) led their Senate colleagues in demanding answers from Trump Education Secretary Linda McMahon about the Trump Administration’s proposal to eliminate affordable student loan repayment options for millions of Americans. On December 8, 2025, Senator Warren led her colleagues in writing to the federal student loan servicers to ensure they are providing borrowers with the customer service they deserve in the wake of the Trump administration’s student loan policy whiplash. The senators sent letters to MOHELA, Nelnet, EdFinancial, Maximus, and CRI. On December 1, 2025, Senator Warren published an op-ed in USA Today calling for Secretary of Education Linda McMahon to resign following the recent news that President Trump and Secretary McMahon plan to further dismantle the Department of Education (ED). On November 17, 2025, Senator Warren led over 40 of her colleagues in a letter urging Secretary of Education Linda McMahon and Secretary of the Treasury Scott Bessent to immediately end any plans to sell or transfer the federal student loan portfolio to the private market. On November 10, 2025, Senator Warren led her colleagues in a letter urging the Trump administration to use the IRS’s existing legal authorities to stop the looming “tax bomb” facing borrowers who obtain income-driven repayment (IDR) discharges of their student loan debt. On October 15, 2025, Senator Warren and Representative Ayanna Pressley (D-Mass.) led 70 members of Congress in a letter calling on the Trump administration to address the ongoing and unprecedented wave of student loan delinquencies and defaults, which threatens the financial stability of millions of people and could have disastrous effects on the American economy. On September 19, 2025, following a push by Senator Warren and nine other senators, the Acting Inspector General of the U.S. Department of Education agreed to open an investigation into DOGE’s infiltration of internal systems, including the scope of its access to sensitive student loan borrower information and its impact on borrowers’ rights and privacy. On August 26, 2025, Senator Warren led colleagues in sending a follow-up letter to Education Secretary Linda McMahon condemning the Department of Education for deliberately hiding the “Submit a Complaint” button on the Office of Federal Student Aid’s website, firing employees responsible for providing customer service to borrowers and families, and misleading Congress about the scope of these firings. On August 4, 2025, Senator Warren led eight senators in pressing major private student loan lenders on their plans to serve the incoming surge of borrowers who will be pushed to the industry because of Republicans’ recently passed “Big, Beautiful Bill.” On July 17, 2025, Senator Warren released a new 23-page report , “Education At Risk: Frontline Impacts of Trump’s War on Students,” highlighting warnings from 11 major national education and civil rights organizations on the impact of the Trump Administration’s dismantling of the Department of Education (ED) and slashing support to millions of American students, primary and secondary school teachers, administrators, parents, and student loan borrowers. On July 15, 2025, Senators Warren and Sanders, along with Senate Democratic Leader Chuck Schumer, sent a letter to Secretary of Education Linda McMahon, urging her to reverse the interest hike on student loan borrowers in the SAVE forbearance. ###