Trending Now - Treasury Assumes Control of Federal Student Loan Management

WHO:

Education Secretary Linda McMahon stated, “The Department of Education has failed to effectively manage and deliver these critical programs.”

Treasury Secretary Scott Bessent emphasized the Treasury's capability to manage the loans.

Kyra Taylor, staff attorney at the National Consumer Law Center, criticized the transition, stating it would create a “new set of obstacles and uncertainty with no plan in place to resolve them.”

Roxanne Garza, director of higher education policy at EdTrust, expressed concern about the changes adding confusion for borrowers.

Education Secretary Linda McMahon stated, “The Department of Education has failed to effectively manage and deliver these critical programs.”

Treasury Secretary Scott Bessent emphasized the Treasury's capability to manage the loans.

Education Secretary Linda McMahon stated, “As the federal student aid portfolio soars to nearly $1.7 trillion and with nearly a quarter of student loan borrowers in default, Americans know that the Department of Education has failed to effectively manage and deliver these critical programs.”

Treasury Secretary Scott Bessent emphasized the Treasury's capability to manage the loans.

Education Secretary Linda McMahon stated, “By leveraging Treasury’s 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.”

Treasury Secretary Scott Bessent said, “Treasury has the unique experience, the operational capability, and the financial expertise to bring long overdue financial discipline to the program and be better stewards of taxpayer dollars.”

Treasury Department

Education Department

President Trump

Education Secretary Linda McMahon

Treasury Secretary Scott Bessent

Kyra Taylor, staff attorney at the National Consumer Law Center

Roxanne Garza, director of higher education policy at EdTrust

Rep. Tim Walberg, R-Mich., House Education and Workforce Committee Chairman

Rep. Bobby Scott, D-Va., Ranking Member

WHAT:

The Treasury Department will manage federal student loans in default, which total about $180 billion, or 11% of the government’s nearly $1.7 trillion student loan portfolio.

The agreement includes a three-phase transition plan for the management of federal student loans.

The first phase will see Treasury resuming control of collecting on defaulted student loans.

The second phase will expand Treasury's management to include servicing non-defaulted debts, "to the extent practicable."

The third phase will involve Treasury taking over administration of the Free Application for Federal Student Aid (FAFSA).

The Education Department has implemented at least ten interagency agreements (IAAs) aimed at shuttering the agency under McMahon’s supervision.

The Treasury Department will take over the collection of defaulted federal student loan debt, which totals about $180 billion.

The agreement includes a three-phase transition plan for the management of federal student loans.

The first phase will see Treasury resuming control of collecting on defaulted student loans.

The second phase will expand Treasury's management to include servicing non-defaulted debts, "to the extent practicable."

The third phase will involve Treasury taking over administration of the Free Application for Federal Student Aid (FAFSA).

The Treasury Department will take over management of student loans whose borrowers are in default, totaling about $180 billion, or 11% of the government’s $1.7 trillion student loan portfolio.

The agreement includes a three-phase transition plan for the management of federal student loans.

As of early March 2026, 9.2 million borrowers are in default, with an additional 2.4 million in late-stage delinquency.

The Treasury Department will manage federal student loans in default, which total about $180 billion, or 11% of the government’s nearly $1.7 trillion student loan portfolio.

The agreement is a 17-page document outlining a realignment of the nation’s federal student loan programs.

The Education Department has implemented at least ten interagency agreements (IAAs) aimed at shuttering the agency under McMahon’s supervision.

The Treasury Department will eventually take over control of the entirety of the Education Department’s nearly $1.7 trillion loan portfolio.

The portion of the student loan portfolio being transferred to the Treasury Department amounts to about $180 billion, or 11% of the government’s total student loan portfolio.

The agreement outlines a second phase where the Treasury will “assume operational responsibility” over non-defaulted loans, “to the extent practicable.”

The Education Department has reported that approximately 9.2 million Americans are in default on student loans as of March 2026.

About 12 million Americans are behind on federal student loan payments in some way.

The Treasury Department will manage federal student loans in default.

The Treasury will assume operational responsibility for collecting on defaulted federal student loans.

More than 7 million borrowers are in default.

The Education Department's federal student loan portfolio is nearly $1.7 trillion.

The move will impact roughly 10 million borrowers who are in default or late-stage delinquency.

The Education Department has implemented at least ten interagency agreements (IAAs) aimed at shuttering the agency.

WHERE:

United States (specific locations not mentioned)

WHEN:

The announcement regarding the transition was made on Thursday, March 17th, 2026.

A new income-driven repayment plan will be available for borrowers on July 1st, 2026.

The announcement regarding the transition was made on Thursday, March 17th, 2026.

The announcement was made on Thursday, March 17th, 2026.

Federal student loans go into default after 270 days without payment.

A new income-driven repayment plan will be available for borrowers on July 1st, 2026.

WHY:

The changes are part of President Trump's efforts to dismantle the Education Department, which he ordered to be dismantled on March 17th, 2025.

Trump officials stated that the Education Department is “ill-equipped” to handle such a large loan portfolio and blamed the Biden administration for focusing on loan cancellation rather than helping borrowers resume payments.

The changes are part of President Trump's efforts to dismantle the Education Department, which he ordered to be dismantled on March 17th, 2025.

The changes are part of President Trump's efforts to dismantle the Education Department, which he ordered to be dismantled almost exactly a year ago.

The move is part of President Trump's pledge to abolish the Education Department.

The Education Department aims to convince Congress that it is no longer needed.

The changes are intended to streamline the federal student aid programs and improve management.

HOW:

The agreement is the 10th interagency agreement reached by the administration to transfer responsibilities from the Education Department to other federal agencies.

The agreement is framed as a partnership, with some components of student loan policies remaining at the Education Department.

The Treasury will provide operational support to the Education Department’s efforts to return borrowers to repayment.

The transition involves a multi-phase process to procure the Education Department's federal student aid services.

The Treasury is expected to leverage its expertise in finance and economic policy to manage the loans.

(UPDATED March 20, 2026 21:05 UTC)

In a significant shift, the Treasury Department will now manage federal student loans in default, which amount to about $180 billion, as part of a transition plan announced last Thursday. Education Secretary Linda McMahon criticized the Department of Education's management of these programs, while Treasury Secretary Scott Bessent assured that the Treasury is equipped to handle the loans. This change is part of President Trump's broader initiative to dismantle the Education Department, which he ordered a year ago, and it includes a new income-driven repayment plan set to launch on July 1, 2026.

(UPDATED March 20, 2026 17:15 UTC)

On Thursday, March 17, 2026, the Treasury Department announced it will take over the collection of about $180 billion in defaulted federal student loan debt, marking a significant shift in how these loans are managed. Education Secretary Linda McMahon criticized the Department of Education for failing to effectively manage these programs, while Treasury Secretary Scott Bessent highlighted the Treasury's capability to handle the loans through a three-phase transition plan. This plan will first see the Treasury resume control of collecting on defaulted loans, then expand to servicing non-defaulted debts, and finally take over administration of the Free Application for Federal Student Aid, as part of President Trump's efforts to dismantle the Education Department.

(UPDATED March 20, 2026 13:19 UTC)

On Thursday, March 17, 2026, Education Secretary Linda McMahon announced that the Treasury Department will take over management of about $180 billion in student loans from borrowers currently in default, which is roughly 11% of the government's total student loan portfolio. This transition comes as nearly 9.2 million borrowers are in default and an additional 2.4 million are late-stage delinquent, highlighting concerns about the Department of Education's ability to manage these critical programs effectively. The agreement, which includes a three-phase plan for the transition, marks the 10th interagency agreement aimed at dismantling the Education Department as part of President Trump's ongoing efforts.

(UPDATED March 20, 2026 11:08 UTC)

In a significant shift, the Treasury Department will now manage federal student loans in default, which amount to about $180 billion, as part of a new agreement aimed at improving the handling of the nation's student loan programs. Education Secretary Linda McMahon expressed confidence that this move, backed by Treasury Secretary Scott Bessent's financial expertise, will finally provide functioning programs after years of mismanagement. This 17-page agreement outlines a partnership where some aspects of student loan policies will still reside at the Education Department, which Trump officials criticized for being "ill-equipped" to manage such a large loan portfolio.

(UPDATED March 20, 2026 09:10 UTC)

In a significant move, the Treasury Department will take over control of the Education Department's nearly $1.7 trillion loan portfolio, starting with about $180 billion, which represents 11% of the total. This agreement includes a second phase where the Treasury will assume operational responsibility for non-defaulted loans, as the Education Department faces challenges managing the current situation, with approximately 9.2 million Americans in default and 12 million behind on payments. Trump officials have criticized the Biden administration for prioritizing loan cancellation over assisting borrowers, framing this transition as a necessary partnership while retaining some student loan policy components at the Education Department.

(UPDATED March 20, 2026 01:27 UTC)

On Thursday, March 17, 2026, President Trump announced that the Treasury Department will take over the management of federal student loans in default, affecting roughly 10 million borrowers. This significant shift comes as part of Trump's pledge to abolish the Education Department, which currently oversees a federal student loan portfolio of nearly $1.7 trillion, with over 7 million borrowers in default. The Treasury will assume operational responsibility for collecting on these loans and will provide support to help borrowers return to repayment, with a new income-driven repayment plan set to launch on July 1, 2026.