Treasury Department to Take Over Management of Defaulted Student Loans
The U.S. Treasury Department will assume management of federal student loans in default, marking a significant step in the Trump administration's plan to dismantle the Department of Education. Under a new 17-page agreement, the Treasury will take over approximately $180 billion in defaulted loans held by about 9.2 million Americans. While the immediate transition affects only defaulted loans, a second phase aims to transfer operational responsibility for all student loans to the Treasury, though no timeline has been set. Borrowers are advised that their repayment processes and servicers remain unchanged during this transition. This move bypasses Congress, which holds the sole authority to close the Education Department, by relocating its functions to other federal agencies. Involuntary collections on federal student loans currently remain on hold despite the administrative shift.
Wire timeline
Treasury Department to Take Over Management of Defaulted Student Loans
The U.S. Treasury Department will assume management of federal student loans in default, marking a significant step in the Trump administration's plan to dismantle the Department of Education. Under a new 17-page agreement, the Treasury will take over approximately $180 billion in defaulted loans held by about 9.2 million Americans. While the immediate transition affects only defaulted loans, a second phase aims to transfer operational responsibility for all student loans to the Treasury, though no timeline has been set. Borrowers are advised that their repayment processes and servicers remain unchanged during this transition. This move bypasses Congress, which holds the sole authority to close the Education Department, by relocating its functions to other federal agencies. Involuntary collections on federal student loans currently remain on hold despite the administrative shift.
AP News