Legal Counsel at HEAG is closely tracking a House Education & Workforce Committee Bill that would shift core Department of Education functions to other federal agencies. Chief among the proposals is the “Less Bureaucracy, Better Student Aid Act,” which would move Federal Student Aid’s functions to the Department of the Treasury along with existing appropriations, staff, contracts, and records. Companion bills would transfer additional offices as follows:

  • The Office of Career, Technical, and Adult Education to the Department of Labor;
  • Shift TRIO, GEAR UP, and GAANN to the Department of Labor; and
  • Place Section 117 foreign gift and contract reporting with the Department of State.

These actions are in committee now and subject to change at any time, but as things stand today, the committee advanced the higher education portions on near-identical votes, including a 19–16 recorded vote to transfer Federal Student Aid to the Dept. of the Treasury.

Supporters frame the effort as creating a leaner, results-driven government by assigning responsibilities to agencies they believe are better positioned to manage them. Dissenting members raised concrete capacity concerns, noting Treasury does not expect to have the contracted staff needed to support default resolutions until the end of 2026 at the earliest, and questioning whether Treasury has the institutional eligibility and borrower relief expertise that has resided at Education for decades. Whatever your position on the issue, your institution should prepare for changes that affect your reporting requirements and how you administer Title IV funds. For institutions, the legal obligations themselves will continue to be grounded in statute and regulation. The near-term risk lies in operations and communications during any transition. Campuses are already voicing concern that responsibilities splintered across Treasury, Labor, and State could multiply reporting lines and deadlines, heightening the risk of errors and audits. These concerns are valid but can be managed with careful attention to the regulation and additional compliance oversight controls.

Questions about Treasury’s readiness for default management and complex discharge determinations translate into counseling challenges for aid offices and potential delays or confusion for borrowers. Even though the legislation contemplates transferring staff, contracts, and records alongside FSA, experience teaches that large-scale migrations can strain systems interfaces and timelines that schools rely on. In short, the most significant impacts for campuses, if these bills become law, are likely to be practical: maintaining compliance while agencies build new capacity, aligning institutional processes to evolving federal instructions, and communicating clearly with students and borrowers amid uncertainty.

For institutions, statutory and regulatory obligations will continue to govern, and stakeholders should be focused on the practical implications of any transition. HEAG’s staff and dedicated legal team will continue to track these developments and provide timely, clear updates as legislative text, timelines, and agency plans evolve. With more than 35 years of experience, HEAG provides comprehensive student financial aid consulting support to private, public, and proprietary institutions, including but not limited to direct support as needed to assist colleges and universities with staff training, interpretation of any new regulations and application of any new or revised regulations.

If you would like to discuss what these proposals could mean for your campus, contact us at info@heag.us to learn how our services can help you manage your financial aid compliance programs and related student services.