Trump Administration Signals Major Shift in Federal Student Loan Management as Education Department Faces Potential Restructuring

WASHINGTON - The Trump administration has signaled major changes to federal student loan management amid discussions of dismantling the Department of Education, according to recent statements from key officials [1][2].

During a March 7 Fox & Friends appearance, newly-confirmed Education Secretary Linda McMahon stated the country does not need an Education Department, suggesting student loans and grants 'might be best served in another department' [1].

In Oval Office remarks on March 6, President Trump indicated student loans could be transferred to either the Treasury Department, Small Business Administration (SBA), or Commerce Department [1]. The federal student loan portfolio currently totals $1.693 trillion across more than 40 million borrowers [2].

Expert analysis suggests the Treasury Department as the most likely candidate for managing student loans. 'A lot of the student loan repayment programs already require income verification, which the Treasury Department already has,' explained Andrew Gillen, research fellow at the Cato Institute for Economic Freedom [2].

However, completely dismantling the Education Department would require congressional approval. 'It clearly cannot be shut down without it,' McMahon acknowledged in her confirmation hearing [2].

Recent developments include:

• The Department of Education's shutdown of parts of SAVE and income-driven repayment plan applications in late February [1]
• The 8th Circuit Court of Appeals' block of the Biden-Harris Administration's SAVE plan in mid-February [2]
• Cuts to dozens of Education Department contracts by the Department of Government Efficiency under Elon Musk's direction [3]

The Department currently manages several critical functions beyond student loans, including distribution of Pell Grants, oversight of civil rights in education, and administration of programs for disabled and low-income students [3][4].

Student advocacy groups have expressed concern about potential disruptions. The Student Borrower Protection Center warned on March 3 that changes could 'result in mass chaos, more delinquencies and defaults' [1].