President Donald Trump is expected to act soon on his promise to dismantle the federal Department of Education, the agency that supplies a small percentage of funding to public schools, enforces anti-discrimination laws, and administers the Student Aid Program.
It also oversees federal student loans held by nearly 43 million people, or one in six American adults, according to the Congressional Research Service. With Trump’s plans to shut down the department, borrowers are wondering what it will mean for their loans and repayment plans.
If it does close, they’re not going away. Trump said they would most likely be overseen by a different federal agency.
“For the most part, students wouldn’t even notice,” said Andrew Gillen, research fellow at the Cato Institute for Economic Freedom. “Where you mail your FAFSA, or repayment checks might change.”
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Trump has yet to spell out how he would dismantle the department. Gillen said most agree he would need legislation to pass through Congress to do so, but some legal experts say there may be ways to do it without Congressional approval.
Newly confirmed Secretary of Education Linda McMahon said Friday in an appearance on “Fox & Friends” that she’s on board with Trump’s plans to close the department. In another interview, She told NewsNation that federal aid, including student loans and Pell Grants “might be best served in another department.” She added that Trump understands he needs to work with Congress.
“I think my job is to convince Congress that the steps that we are taking are in the best interest of the kids,” McMahon told NewsNation.
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Without the Department of Education, who oversees student loans?
Trump told reporters in the White House on March 6 that student loans would be brought under the jurisdiction of the Department of the Treasury, Department of Commerce, or the Small Business Administration (SBA).
“I don’t think the education [department] should be handling the loans. That’s not their business,” Trump said.
He added he thought it would make sense for the SBA to oversee student loans and that the agency’s new administrator Kelly Loeffler, a former Republican senator from Georgia, liked the idea.
“That is by the way the most complicated thing in moving, but it’s very simple if you do that,” Trump said.
Gillen said shifting oversight of federal student aid to the Department of the Treasury would make for a more seamless transition.
“For a lot of the student loan repayment plans, you need income verification,” Gillen said. “Treasury already has that. So just from an administrative perspective, Treasury already has a lot of information that is necessary to implement the student loan programs.”
Gillen added the treasury department also already has the infrastructure to handle millions of borrowers.
“Adding 40 million new borrowers wouldn’t be out of left field for them,” he said.
It’s unlikely that student loans would be parceled out to more than one organization, Gillen added, but oversight of other programs run by the Department of Education could be distributed to different agencies.
Advocates from organizations representing students, parents, and teachers including Educators for Excellence, the Council of Parent Attorneys and Advocates, The National Center for Youth Law, and the American Federation of Teachers have all released statements condemning Trump’s plans to cut the department.
Reach Rachel Barber at rbarber@usatoday.com and follow her on X @rachelbarber_
This article originally appeared on USA TODAY: What happens to student loans if Trump dismantles Education Department
