Cliff Notes
- President Trump expressed skepticism about the Education Department managing the federal government’s nearly $2 trillion student loan portfolio, stating, "That’s not their business."
- He proposed relocating the Federal Student Aid office, which administers loans to millions of borrowers, to the Small Business Administration (SBA).
- The move would require congressional approval, making it a significant legislative challenge, particularly with current political dynamics.
- An executive order draft suggests potentially closing the Education Department to the "maximum extent appropriate," although the administration’s plans regarding this remain unclear.
- The Federal Student Aid office is facing staffing issues, with about 10% of its employees opting for buyout offers recently, raising concerns about the transition process and the management stability of the student loan portfolio.
Trump Floats Major Change to Federal Student Loan Office
The president said he doesn’t think the Education Department should be handling the federal government’s nearly $2 trillion student loan portfolio. “That’s not their business,” he said.
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Washington – President Donald Trump on Thursday floated major changes to the office that oversees the federal government’s massive student loan portfolio.
Speaking to reporters at the White House, he said he’s had discussions about moving the Federal Student Aid office, which handles loans for millions of borrowers, elsewhere within the federal government. The Education Department, he argued, shouldn’t be in charge of helping people pay for college.
“That’s not their business,” he said.
Specifically, he said he hopes to shift Federal Student Aid to the Small Business Administration, which provides financial and counseling assistance to entrepreneurs. Linda McMahon, who was confirmed Monday by the U.S. Senate to lead the Education Department, previously ran the SBA during Trump’s first term.
Kelly Loeffler, a former Republican senator from Georgia who now leads the SBA, has expressed interest in the student loan portfolio, Trump said.
“Kelly really liked it and would like to do it,” he said.
The proposal would technically require an act of Congress, and the Senate’s filibuster rules would necessitate Democrats to get on board, which is unlikely. It would also be a major technical challenge, which Trump himself acknowledged Thursday.
The Federal Student Aid office is “the most complicated thing” to move, he said.
Trump’s comments come amid broader uncertainty about the Education Department’s fate. A White House official told USA TODAY on Thursday that the president is still mulling a potential executive action to reexamine the future of the agency.
A preliminary draft of an executive order obtained by USA TODAY directs the education secretary to close the agency to “the maximum extent appropriate and permitted by law.” It’s unclear whether the administration is still considering that proposal.
The Federal Student Aid office is already losing staff
The Federal Student Aid office has already lost a significant number of employees in recent months. An internal list reviewed by USA TODAY shows roughly 10% of its workforce took Elon Musk’s “Fork in the Road” buyout offers. Those numbers were tallied before last Friday, when the Education Department offered all agency staffers $25,000 (or less) to quit or retire by the following Monday.
Project 2025, the conservative policy blueprint that has influenced many of Trump’s actions since taking office, also proposes transferring the Federal Student Aid office to the Treasury Department.
Some college financial aid officers have expressed skepticism about upheaving the hundreds of employees in charge of a portfolio that rivals the biggest banks. Even if Congress passes a new law, the process likely wouldn’t be simple or straightforward, Karen McCarthy, the vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators, previously told USA TODAY.
“Nobody could really imagine that Chase could fold into Citibank quickly or easily,” she said.
Contributing: Joey Garrison
Zachary Schermele is an education reporter for USA TODAY. You can reach him by email at zschermele@usatoday.com. Follow him on X at @ZachSchermele and Bluesky at @zachschermele.bsky.social.