ED shifting federal student loans to Treasury amid dismantle
Key Questions
What is the Trump administration's plan to shift federal student loans to the Treasury?
The administration is transferring about 9.2 million defaulted loans worth $180 billion to the Treasury starting March 19, 2026, with potential for the full $1.7 trillion portfolio affecting 43 million borrowers. This move coincides with 40% staff cuts at the Education Department. Collections and garnishments are paused until July 2026.
What deadlines and options are available for borrowers during this shift?
Borrowers can rehabilitate or consolidate loans into PSLF or RAP programs before July 2026. Parent PLUS loans have a June 30 deadline, and OBBBA caps loans at $20k/year or $65k total (including Grad PLUS) with grandfathering for PSLF/IDR by July 1. Vets, moms, and K-12 workers may face blocks, pushing them to private loans.
What criticisms have been raised about this policy?
Democrats like Warren and Sanders have sent letters to McMahon and Bessent calling it an 'illegal scheme.' NASFAA has slammed the policy for risks to SAVE and PSLF programs. A fraud crackdown may also impact educators.
Trump admin shifts ~9.2M defaulted/$180B to Treasury (2026-03-19 start), full $1.7T/43M potential; 40% staff cuts; Dems Warren/Sanders letters to McMahon/Bessent slam 'illegal scheme'; NASFAA slams policy/SAVE/PSLF risks; collections/garnishment pause till July 2026, rehab/consol into PSLF/RAP; Parent PLUS June 30 deadline; OBBBA caps ($20k/yr,$65k total incl. Grad PLUS) grandfather for PSLF/IDR by July 1—vets/moms K-12 blocked to private ex-71944833/1AGYQbq5; fraud crackdown risks impact educators.