Trump administration moving federal student loan management to Treasury Department

By Kanishka Singh

WASHINGTON, March 19 (Reuters) – The Trump administration said on Thursday the Department of Education was handing off a portion of its student loan portfolio to the Treasury Department, as the government advances its attempts to dismantle the Education Department.

President Donald Trump promised during his 2024 election campaign to dismantle the Education Department as part of a conservative bid to shrink the federal government’s role in education in favor of more control by the states.

Late last year, the Education Department announced new partnerships with four other federal departments – Labor, State, Interior and Health and Human Services – to share or transfer some of the functions it performed.

On Thursday, the Education and Treasury Departments announced an interagency agreement under which Treasury will assume responsibility for collecting on defaulted federal student loan debt.

“In subsequent phases, Treasury will work to provide operational support over non-defaulted federal student loan debt, to the extent practicable and permitted by law, while also seeking opportunities to provide operational support to FSA’s other functions,” the joint statement said, referring to Federal Student Aid.

Currently, the Education Department says the student loan portfolio stands at nearly $1.7 trillion, with less than 40% of borrowers in repayment and almost 25% of borrowers in default.

Created by Congress in 1979, the Department of Education’s main roles were administering college loans, tracking student achievement and enforcing civil rights in schools. It also gave federal funding to help districts with a high percentage of needy children and to assist students with disabilities.

Even though the Trump administration needs an act of Congress to formally eliminate the department, Education Secretary Linda McMahon announced plans last year to terminate hundreds of employees as part of what it said was the department’s “final mission.”

(Reporting by Kanishka Singh in Washington; Editing by Bill Berkrot)