Education Department Shifting Student Loan Responsibilities to Treasury

The U.S. Education Department Announced on 3/19/2026. it is moving some of its Student Loan Portfolio to the Treasury Department, the Latest and Largest, in a Series of Program Shifts, as the Trump (R) Administration Works toward its Goal of Shutting Down the Education Department.

The Inter-Agency Agreement, Pfficials said, will move “operational responsibility for collecting on defaulted federal student loan debt and provide” to the Treasury, which will also Help get Borrowers Back into Repayment.

“The Federal Student Assistance Partnership marks an intentional and historic step toward breaking up the Federal education bureaucracy and dramatically improving the administration of Federal student aid programs that millions of American students, families, and borrowers rely on to access higher education,” said Secretary of Education Linda McMahon (R).

“As the Federal student aid portfolio soars to nearly $1.7 trillion and with nearly a quarter of student loan borrowers in default, Americans know that the Department of Education has failed to effectively manage and deliver these critical programs. By leveraging Treasury’s world-renowned expertise in finance and economic policy, we are confident that American students, borrowers, and taxpayers will finally have functioning programs after decades of mismanagement,” She added.

The Goal is for the Treasury Department to Eventually Help with Non-Defaulted Federal Student Loans, according to the Announcement. Ultimately, the Education Department wants the Whole Portfolio to go to the Treasury.

“Under President Trump’s leadership we are undertaking the first serious effort to clean up a $1.7 trillion portfolio that has been badly mismanaged for years. Treasury has the unique experience, the operational capability, and the financial expertise to bring long overdue financial discipline to the program and be better stewards of taxpayer dollars,” said Treasury Secretary Scott Bessent (R).

The Trump Administration said Borrowers do Not have to make any Changes, and will go on Paying their Loan Servicer as Normal.

Trump a year ago Signed an Executive Order for the Education Department to Wind itself Down, as much as possible without Congressional Action. In Addition to Sweeping Layoffs there, the Order has also Spurred a Series of Interagency Agreements for other Cabinet-Level Agencies, including the Departments of Labor and State, to take over Education Programs.

“The Trump Administration continues to unlawfully dismantle the Education Department by moving programs and offices to other federal agencies despite clear warning from Congress that Education Secretary Linda McMahon lacks the authority to do so,” said Rachel Gittleman, President of the American Federation of Government Employees (AFGE) Local 252, which Represents Workers at the Education Department.

“This isn’t efficiency — Secretary McMahon is creating confusion, eroding public trust, and harming students and families. This is an insult to the nearly 43 million Americans with federal student loan debt and to the taxpayers who depend on federal oversight to prevent waste, fraud and abuse,” Gittleman Added.










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