{"id":8975,"date":"2026-03-20T10:00:51","date_gmt":"2026-03-20T15:00:51","guid":{"rendered":"https:\/\/westplexnews.com\/index.php\/2026\/03\/20\/education-department-to-transfer-management-of-defaulted-student-loans-to-treasury\/"},"modified":"2026-03-20T10:00:51","modified_gmt":"2026-03-20T15:00:51","slug":"education-department-to-transfer-management-of-defaulted-student-loans-to-treasury","status":"publish","type":"post","link":"https:\/\/westplexnews.com\/index.php\/2026\/03\/20\/education-department-to-transfer-management-of-defaulted-student-loans-to-treasury\/","title":{"rendered":"Education Department to transfer management of defaulted student loans to Treasury"},"content":{"rendered":"
\"The
\n

The U.S. Department of Education on Feb. 20, 2026. (Photo by Shauneen Miranda\/States Newsroom)<\/p>\n<\/figcaption><\/figure>\n

WASHINGTON \u2014 The U.S. Treasury Department will take over the Department of Education\u2019s responsibility for collecting on\u00a0defaulted federal student loan debt<\/a>, President Donald Trump\u2019s administration announced Thursday.<\/p>\n

It\u2019s the first step in a multi-phase process that will end with Treasury taking on the entire federal student loan portfolio. It\u2019s also the latest interagency agreement announced by the Education Department.\u00a0<\/p>\n

A senior Department of Education official cited the agency\u2019s \u201clongstanding partnership\u201d with Treasury in administering federal student aid programs and expressed confidence that the department was in a good position to increase its role.\u00a0<\/p>\n

The administration continues to take sweeping steps to do away with the 46-year-old Education Department, as Trump seeks to return education \u201cback to the states.\u201d That effort comes despite much of the oversight and funding of schools already occurring at the state and local levels.\u00a0<\/p>\n

In the first phase, Treasury will also \u201cprovide operational support\u201d to the Education Department\u2019s efforts to return borrowers to repayment, per the\u00a0announcement<\/a>.\u00a0<\/p>\n

The Education Department\u2019s student loan portfolio stands at roughly $1.7 trillion. The agency says fewer than 40% of borrowers are in repayment and nearly a quarter are in default.\u00a0<\/p>\n

In later phases, Treasury is set to \u201cwork to provide operational support over non-defaulted Federal student loan debt, to the extent practicable and permitted by law, while also seeking opportunities to provide operational support to FSA\u2019s other functions.\u201d\u00a0<\/p>\n

The senior Education Department official said that borrowers currently making payments \u201cshould see no change\u201d and can expect to see \u201cbetter customer service.\u201d\u00a0<\/p>\n

Department forges multiple agreements<\/h4>\n

U.S. Education Secretary Linda McMahon said that \u201cby leveraging Treasury\u2019s 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,\u201d in a statement Thursday.\u00a0<\/p>\n

The Education Department has announced\u00a0nine other agreements<\/a> with the departments of Labor, Health and Human Services, Interior and State that transfer several of its\u00a0responsibilities<\/a> to those agencies.\u00a0<\/p>\n

Meanwhile, the\u00a0U.S. Supreme Court<\/a> in July 2025 temporarily greenlit mass layoffs and a plan to dramatically downsize the Education Department ordered earlier that year. Those layoffs inflicted a heavy hit on Federal Student Aid, among other units at the agency.\u00a0\u00a0<\/p>\n

That plan was outlined in a\u00a0March 2025 executive order<\/a> that called on McMahon to \u201ctake all necessary steps to facilitate the closure\u201d of her own department.<\/p>\n

\u2018Irresponsible, reckless\u2019\u00a0<\/h4>\n

Sen. Patty Murray of Washington state, the top Democrat on the Senate Appropriations Committee, said that \u201cinstead of helping student borrowers get the support they need, Secretary McMahon is focused on illegally hollowing out the department she leads and creating new, harmful bureaucracy while she\u2019s at it,\u201d in a statement Thursday.<\/p>\n

\u201cDespite all this administration\u2019s talk about creating efficiency, the fact is these agreements simply create pointless new red tape \u2014 while threatening basic services and support that students depend on every day,\u201d Murray added.<\/p>\n

Rachel Gittleman, president of American Federation of Government Employees Local 252, which represents Education Department workers, lambasted the announcement Thursday.<\/p>\n

Gittleman described it as \u201can 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.\u201d<\/p>\n

Gittleman noted that since McMahon took over, \u201cthe agency has fired or pushed out nearly half of Federal Student Aid\u2019s workforce, leading to the Government Accountability Office warning that the majority of federal student loan servicers running the government\u2019s $1.7 trillion student loan portfolio have been repeatedly breaking the law without staff oversight.\u201d<\/p>\n

The\u00a0GAO report<\/a> found that the staffing reductions affected the government\u2019s ability to determine how well student loan servicers are doing their jobs.<\/p>\n

Aissa Canchola Ba\u00f1ez, policy director for the advocacy group Protect Borrowers, blasted the administration\u2019s move as \u201cirresponsible, reckless, and bad news for our most vulnerable student loan borrowers.\u201d<\/p>\n

She added that \u201cin the midst of a growing affordability crisis where American families are already struggling to make ends meet, this risks driving millions of borrowers further into financial hardship.\u201d\u00a0<\/p>","protected":false},"excerpt":{"rendered":"

The U.S. Department of Education on Feb. 20, 2026. (Photo by Shauneen Miranda\/States Newsroom) WASHINGTON \u2014 The U.S. Treasury Department will take over the Department of Education\u2019s responsibility for collecting on\u00a0defaulted federal student loan debt, President Donald Trump\u2019s administration announced Thursday. It\u2019s the first step in a multi-phase process that will end with Treasury taking…<\/p>\n","protected":false},"author":2,"featured_media":8976,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8975","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\nEducation Department to transfer management of defaulted student loans to Treasury - WestplexNews.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/westplexnews.com\/index.php\/2026\/03\/20\/education-department-to-transfer-management-of-defaulted-student-loans-to-treasury\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Education Department to transfer management of defaulted student loans to Treasury - WestplexNews.com\" \/>\n<meta property=\"og:description\" content=\"The U.S. Department of Education on Feb. 20, 2026. 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