Student-loan borrowers could see an easier repayment process through Biden's budget request — along with efforts to make college cheaper
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- Biden's administration released its budget request for the upcoming fiscal year.
- It includes a $3.1 billion funding increase for the Education Department to help student-loan borrowers.
- Given GOP opposition, it's unlikely the request will pass in its current form.
President Joe Biden's budget wish list is out — and it includes boosted funding to help student-loan borrowers as they continue to navigate the return to repayment.
Biden's budget request released on Monday outlines what his administration is seeking to prioritize in the final year of his first term. It includes a range of funding proposals, including the Child Tax Credit restoration, Social Security and Medicare protections, and investments in more affordable housing.
The Education Department is also on Biden's list to receive more funding. Specifically, his administration wants to increase funding for the Education Department to $82 billion, marking a $3.1 billion increase from the 2023 level.
The funding boost would address a range of early and higher education priorities. The request includes $2.7 billion for the Federal Student Aid office — up $625 million from 2023 — "to provide better support to the 46 million student loan borrowers and make additional and necessary improvements to the new servicing system," the request said.
The extra funding would allow Federal Student Aid to continue its efforts to modernize the student-loan repayment systems and streamline the Free Application for Federal Student Aid, or FAFSA, applications.
Under Secretary of Education James Kvaal told reporters on a Monday press call that Biden's "budget proposal will go even further in addressing the student debt crisis and promoting upward mobility for education."
Additionally, the budget request proposes getting rid of student-loan origination fees, or fees a lender charges for processing a borrower's loan. When it comes to the cost of college itself, the budget proposed increasing the maximum Pell Grant award to $8,145 and allocating $12 billion for a Reducing the Costs of College Fund that would support strategies to improve college graduation rates while making costs affordable for students.
However, many of the initiatives in Biden's budget request would require congressional approval, and with Republicans holding a majority in the House, it's unlikely it would pass in its current form. For example, while Biden requested boosted funding for Federal Student Aid in the fiscal year 2023, House Republicans instead released their own proposal to slash funding for the agency to nearly a third below Biden's request at the time.
And, as Business Insider previously reported, the limited funding from Congress has complicated matters for student-loan borrowers. Since federal payments resumed in October after an over three-year pause, borrowers have faced hours-long hold times with their servicer, along with billing errors, due to limited resources resulting from a lack of funding.
The Office of Management and Budget released a statement in November opposing the GOP's proposal to reduce funding for Federal Student Aid, saying that they "would deal a devastating blow to borrowers and the supports they need to successfully navigate repayment. Borrower communications and call center support would be severely curtailed and possibly eliminated, leaving students and parents without help when they have questions or issues related to their loans."