Advancing his plan to dismantle the U.S. Department of Education, President Donald Trump recently announced his plan to immediately cease the department’s management of the federal student loan portfolio and programs for students with disabilities. Under this plan, other federal agencies would be tasked with managing these programs.
This move came a day after Trump signed an executive order to eliminate the education department. According to the order, Trump ultimately seeks to transfer the department’s responsibilities to the individual states. He would need congressional approval to fully get rid of the department.
The executive order did not detail a planned process for dismantling the department, but since Trump took office, his administration has already laid off about half of the Department of Education’s workers and cut $600 million in teacher training grants. Certain student loan repayment plans were also blocked, and the Consumer Financial Protection Bureau, which regulated student loan services and collections, was eliminated.
Trump said, under his plan, the federal student loan portfolio would be controlled by the Small Business Administration, and “special needs” programs would be overseen by the Department of Health and Human Services. However, both agencies are facing cuts in staffing and have had little previous involvement in the education system.
The Department of Education’s Federal Student Aid office is protected under law as the administrator of the federal student loan portfolio and without a vote from Congress, their administrative responsibilities cannot be transferred. The same goes for special education services, as Trump cannot singlehandedly move either service to fall under a different federal agency’s control.
The Federal Student Aid office is responsible for distributing about $120.8 billion in loans, grants and work-study to nearly 10 million students annually. The current federal student loan portfolio consists of about $1.6 trillion in federal student loan debt, according to the executive order. This is debt accumulated from over 43 million student loan borrowers.
According to Axios, a transfer of control over student loans could result in a temporarily disrupted and delayed processing time for current and new student loan disbursement, applications and payments, as well as more potential administrative errors. It is also possible that Trump’s announced plan could have minimal effect on student loan services, as uncertainty remains around what actions Trump will be able to execute.
Even if the Department of Education was abolished, congressionally appropriated student aid including most Pell grants, subsidized loans and work-study would still be available unless Congress specifically acted against them. Additionally, student loan repayments would still be due.
If federal student loans become less accessible, it is possible that some students could start to rely on private loans. However, according to Axios, applying to private loans can be more complicated and not have universal terms, as federal loans do. There are also often no debt forgiveness programs or income-based repayment options for students who take out private loans, which can also have higher interest rates.
Saving your federal student aid information and downloading your repayment history, according to Axios, are proactive steps to take.
As for Trump’s plan to reassign oversight of “special needs” programs, it is not clear what will be done with such responsibilities currently dealt with by the education department’s Office of Special Education and Rehabilitative Services. However, according to NPR, parents have expressed worries about the reorganization of such a program and the impact it could have on disabled students.
