Senators Demand ED Account for $1 Billion Student Loan Fund as Defaults Hit 9M

Four Senate Democrats want the Department of Education to provide answers on how it spent a $1 billion student loan administration fund created by last year’s One Big Beautiful Bill Act. In a September 2 letter to Education Secretary Linda McMahon (PDF File), Senators Elizabeth Warren (D-Mass.), Jeff Merkley (D-Ore.), Cory Booker (D-N.J.), and Chris Van Hollen (D-Md.) say the agency has already spent roughly $216 million from the fund without explaining what it spent them money on. Meanwhile, the number of borrowers in default has climbed to a record high.The $216 million figure comes from the Department of Education’s own Fiscal Year 2027 budget request, which reports that amount obligated as of the start of FY2026 and projects that more than $450 million will still be unspent when FY2027 begins. The senators note that Section 82005 of the OBBBA requires the money to go toward “administrative costs” of the federal student loan program, including servicing, but built in no reporting or oversight requirement.