WASHINGTON - The Trump administration is transferring oversight of federal student loan debt from the Education Department to the Treasury Department, starting with loans held by more than 9 million borrowers in default.
A March 19 interagency agreement marks the latest step in President Donald Trump and Education Secretary Linda McMahon’s effort to dismantle core functions of the Education Department. Future phases aim to shift management of nearly $1.7 trillion in total federal student debt-and possibly parts of the FAFSA application process-to Treasury.
McMahon cited “decades of mismanagement” by the Education Department, arguing Treasury’s financial expertise will improve program delivery for students, borrowers, and taxpayers.
Republicans like Rep. Tim Walberg praised the move as practical; Democrats including Rep. Bobby Scott condemned it. Critics warn the shift risks confusion and erodes trust in a system already strained by instability.
Rachel Gittleman, president of the Education Department workers’ union, called it “an insult” to 43 million borrowers and taxpayers relying on consistent federal oversight.