Student Loans To Get Taken Over By Treasury From Education Department As Trump Dismantles The Latter

The U.S. Department of the Treasury is getting ready to handle some student loan cases while President Donald Trump dismantles the U.S. Department of Education. On Thursday, both agencies came to an agreement, allowing the Treasury Department to take over loans that are overdue by months. According to the Associated Press, the default loans from student borrowers currently amount to $180 billion.

For now, the Treasury Department will only manage some student loans. Eventually, the department is expected to take over all default loans. The agreement also states that the Treasury Department will “assume operational responsibility” of non-defaulted loans at some point. This marks a significant change for the Education Department, which has managed student loan programs since it was founded in the late 1970s.

What are critics saying about the Treasury Department handling student loans?

Opponents of the controversial move say the Education Department is legally required to handle student loans. Kyra Taylor, one of the attorneys at the National Consumer Law Center, said the latest change will likely cause confusion for borrowers.

“The Department of Education has issued a dizzying series of rule changes that make it harder for borrowers to figure out what their options are on their federal student loans,” Taylor told the Associated Press.

She adds that the confusion could lead to mistakes with “devastating effects on families.”

How is the Trump administration justifying the change for student borrowers?

The Trump administration says it’s about dismantling an agency run by liberals. As the Associated Press reported, Education Secretary Linda McMahon said the agreement “marks an intentional and historic step toward breaking up the Federal education bureaucracy and dramatically improving the administration of Federal student aid programs.” 

McMahon spoke about the administration’s plans during her Senate confirmation hearing. According to the Associated Press, McMahon said at that time that the Treasury is a “natural” place for managing student loans.

Student borrowers are considered to be in default when their loans are overdue by over 270 days. About 9.2 million Americans, who are currently in default, live in fear of facing serious consequences. They may see a decline in their credit scores, or they may have their Social Security benefits withheld.