Student loans move to Treasury
The U.S. announced a three‑phase plan to transfer federal student loans from the Education Department to the Treasury — a major administrative shift that could reshape loan servicing and financial aid processes. Officials say the goal is streamlined administration, but borrowers should watch for servicing notices and potential timing changes. (npr.org)
The interagency agreement was announced by Education Secretary Linda McMahon and Treasury Secretary Scott Bessent and is titled the Federal Student Assistance Partnership. (ed.gov: ) The departments say the federal student loan portfolio is nearly $1.7 trillion and that fewer than 40% of borrowers are currently in repayment while roughly a quarter are in default. (ed.gov: ) Agency officials told reporters that about 9.2 million borrowers were in default at the start of March, a figure the Education Department says drives the initial operational move to Treasury. (NPR / WUSF: ) Under the agreement, Treasury will resume operational responsibility for collecting defaulted federal student loans and the departments said Treasury intends to revoke a 25‑year exemption that previously let ED’s Federal Student Aid office service defaulted debt. (Inside Higher Ed: ) (ed.gov: ) Officials described later phases as expanding Treasury’s role to servicing non‑defaulted loans and potentially administering the FAFSA, but they declined to attach specific dates and said the transition should be “seamless.” (Politico: ) (WUSF/NPR: ) Consumer advocates and congressional Democrats signaled immediate concern about oversight and borrower protections while GAO reports that the Education Department has faced gaps in servicer oversight — including pausing key accuracy and call‑quality assessments in 2025 — issues that will affect any agency that manages servicers. (Inside Higher Ed: ) (GAO: )
