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Treasury Department begins taking over student loans as the Education Department gets dismantled

What happened

The Education Department announced it is transferring a portion of its $1.7 trillion student loan portfolio to the Treasury Department as part of a three-phase transition. This marks the largest step yet in the Trump administration's effort to shut down the Education Department entirely. The move will eventually include management of most federal student loans and the FAFSA application process.

Why people care

This affects millions of Americans with federal student loans and represents a fundamental restructuring of how educational financing works in the U.S. The dismantling of the Education Department fulfills a key Trump campaign promise but raises questions about how student services and loan management will function under Treasury oversight.

The takes

Supporters say

This transfer streamlines government operations by consolidating financial functions under Treasury, which already handles other federal lending programs. Eliminating the Education Department reduces bureaucratic redundancy and returns education control to states and local communities where it belongs.

Critics say

Moving student loans to Treasury strips away education-focused expertise and student advocacy functions that the Education Department provided. This transition creates uncertainty for borrowers and may prioritize debt collection over student support services and educational access programs.

Sources

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