As part of the Trump Administration’s ongoing pledge to dismantle the Education Department, the agency reportedly plans to transfer part of its federal student aid program to the Treasury Department. Two people familiar with the plans, granted anonymity because they were not authorized to speak publicly on the matter, said this agreement could come as soon as this week.
Moving the $1.6 trillion student loan portfolio out of ED has been a longtime goal for conservatives. In March, President Trump caught many by surprise by announcing the student loan portfolio would transfer to the Small Business Authority, a move which promoted immediate backlash and legal challenges. As of now, the Office of Federal Student Aid within ED continues to manage the portfolio.
The Higher Education Act of 1965 assigns clear responsibility for student loans to the Federal Student Aid office, meaning any transfer of loans to Treasury would require congressional approval. However, this proposed agreement would not cover the entire student debt portfolio, only shifting the responsibility of handling student loans in default to the Treasury Department.
About 7.7 million borrowers with $180 billion in outstanding federal student loans are in default, 11 percent of the total $1.6 trillion portfolio as of December 2025.
This is an ongoing story and will be updated.