Higher Ed Policy Roundup: Vol. 10 - Issue 20

This Week In Washington

The Office of Federal Student Aid (FSA) published updated quarterly reports to the FSA Data Center providing information on federal aid applications, disbursements, and the federal student loan portfolio. The reports highlight key aspects of the federally managed portfolio, including:

• Approximately 20% of borrowers (8.4 million) have at least one loan in forbearance, which FSA notes, is decreasing as more SAVE borrowers move out of forbearance.
• 13 million borrowers are enrolled in an income-driven repayment plan, including SAVE borrowers.
• Roughly 3.5 million borrowers are more than 30 days delinquent. Of these, 1.4 million borrowers are at risk of defaulting in the next six months.

Earlier this week, the Department of Education (ED) announced that federal student loan borrowers enrolled in auto pay will be eligible for a temporary one percent interest rate reduction beginning July 1, 2026. Borrowers who enroll in autopay by September 30 will receive the reduced rate through June 2028. Currently, borrowers receive a .25% interest rate reduction for enrolling in autopay. This temporary increase is intended to encourage on-time payments and support borrowers as new repayment plans become available.

News You Can Use

According to a report by ED’s Office of Inspector General, staffing cuts at the agency were so deep that the agency eliminated offices that may have been responsible for tasks required by law. ED’s workforce was cut by 40% and it terminated 129 contracts worth $1.3 billion from January to March 2025. The report also found that 15 of the 17 offices eliminated in 2025 appear to have been performing legally required functions or oversight.

The National Bureau of Economic Research (NBER) released a report showing how uncertainty surrounding proposed federal student loan forgiveness influenced borrower behavior. Using survey data linked to credit, employment, and consumption records, researchers found that borrowers who were more optimistic about receiving student loan forgiveness reduced their monthly loan payments and increased non-durable spending during the period of uncertainty surrounding the Biden Administration’s proposed debt cancellation plan.

Recent Legislation

The following bill(s) have been recently introduced for consideration by the 119th Congress (2025-26):

S. 4859 – The Pell Grant Preservation and Expansion Act of 2026 [Sen. Mazie Hirono (D-HI), Patty Murray (D-WA), Jack Reed (D-RI), Sheldon Whitehouse (D-RI)] would improve the structure of the Federal Pell Grant program, by nearly doubling the Pell Grant maximum award, index the maximum award for inflation, and make other changes to expand the award for working students. A companion bill H.R. 9414 was also introduced in the House.