Trump announced that federal student loans will be transferred from the Department of Education to the Small Business Administration (SBA). This statement came one day after he signed an executive order aimed at eliminating the Department of Education. During an appearance in the Oval Office, Trump mentioned that the SBA would oversee the management of approximately $1.7 trillion in federal student loans.
“We have a significant portfolio with numerous complicated loans, and it’s coming out of the Department of Education right away, with Kelly Loeffler leading the charge at the SBA,” Trump stated. He expressed confidence that the loans would be managed more effectively than in the past, referencing previous management issues as having been a “mess.”
Additionally, Trump indicated that Robert F. Kennedy, Jr., head of the Health and Human Services (HHS) Department, would take on the responsibility for special needs and nutrition programs following these changes.
The specifics of how the SBA will handle the federal student loan portfolio remain unclear. Trump’s executive order directed Education Secretary Linda McMahon to work on transitioning the department while ensuring that services and programs for Americans continue without interruption. Experts are raising concerns about the feasibility of the SBA managing such a complex portfolio, particularly given the different repayment plans and schedules of over 40 million borrowers.
Senior vice president for education at the Center for American Progress, Jared Bass, expressed skepticism regarding the capabilities of other agencies in taking on the Department of Education’s responsibilities. He emphasized that expertise in oversight is crucial and that having a dedicated Secretary of Education is beneficial.
In an opinion piece, McMahon clarified that eliminating the Department of Education would not happen overnight but indicated that steps could be taken to shift educational authority back to state and local leaders. The department has already reduced its staff by 50% as part of its reorganization efforts. While Trump and McMahon claim that programs like student loans will remain unaffected, advocates and some education experts argue that significant staff reductions will likely impact service delivery.