The Trump administration announced that student lending operations will move to the Treasury from the Department of Education in the latest step towards dismantling the department and returning educational oversight to the states.
In the latest step towards dismantling the Department of Education, the Trump administration announced on Thursday an interagency agreement between the Department and the Treasury that would move student lending operations to the Treasury.
The move comes as President Trump’s administration focuses on returning educational oversight to the states.
The Treasury will “assume operational responsibility for collecting on defaulted Federal student loan debt and provide operational support to ED’s efforts to return borrowers to repayment,” said the Department of Education in a press release.
“I think we’ve been very clear this last week that this is a multiphase process,” said Undersecretary of Education Nicholas Kent in a recent interview.
“The Secretary has been on the record saying that these interagency agreements are proof of concept, that we want to show Congress, that we want to show families, we want to show moms and dads and families that the Department of Education does not need to be here for federal grant aid and federal student loans to continue flowing to borrowers,” Kent continued.
Kent said that characterizing the move of student loan operations to the Treasury as “the next and largest step toward winding down the Department of Education is absolutely the right way to think about it.”
The total of student loans owed is at nearly $1.7 trillion according to the department. The department said that less than 40% of borrowers arrange a repayment program with almost 25% of them being in default.
The department is shifting student loan responsibilities to the Treasury in an effort to wind down operations while maintaining critical programs and restore responsible management to the federal student loan portfolio that was mismanaged under President Biden.
According to Andrew Gillen of the Cato Institute, the size of the department has been reduced by over 40% in just over one year.
Secretary of Education Linda McMahon said in a press release that “cutting through layers of red tape in Washington is one essential piece of our final mission.”
“As we partner with these agencies to improve federal programs, we will continue to gather best practices in each state through our 50-state tour, empower local leaders in K-12 education, restore excellence to higher education, and work with Congress to codify these reforms.”
