Trump Floats Major Changes to Federal Student Loan Office

The president suggested the office could be moved to another agency and that it’s not the ‘business’ of the Education Department.

President Donald Trump delivers remarks on the jobs report from the Oval Office at the White House on March 7, 2025. Anna Moneymaker/Getty Images

President Donald Trump on Thursday suggested there could be major changes coming to how the federal government operates the federal student loan portfolio.

Trump told reporters in the White House that he is considering moving the Federal Student Aid office away from the Department of Education amid talk that he is looking to either downsize or abolish the education agency.

Federal student loans currently overseen by the Education Department’s Federal Student Aid office will “be brought into either Treasury or Small Business Administration or Commerce,” Trump told reporters in the Oval Office.

He also responded to a reporter’s question about the fate of student loans if he did abolish the Education Department.

“We actually had that discussion today” about student loans, Trump said. Small Business Administration Kelly Loeffler “really liked” the idea of moving the loans to her agency, he added.

“I don’t think the Education [Department] should be handling the loans,” Trump added. “That’s not their business.”

A website run by the Federal Student Aid office says that the department is responsible for managing outstanding student loan debts worth hundreds of billions of dollars in loans for millions of borrowers. It specifically oversees Direct Loans, Federal Family Education Loans, and Perkins Loans that have outstanding balances, according to the page.

If the Trump administration is successful in closing down the Education Department, it means that billions in federal money to colleges and schools and managing the federal student loan portfolio would have to be taken up by another department.

Federal education money is central to Trump’s plans for colleges and schools. Trump has vowed to cut off federal money for schools and colleges that push “critical race theory, transgender insanity, and other inappropriate racial, sexual or political content” and to provide more federal funding to states and schools that end teacher tenure and support universal school choice programs.

However, according to the Congressional Budget Office (CBO), Congress established the Federal Student Aid office’s current, performance-based structure in 1998, meaning that if the administration wanted to move the office, it may require an act of Congress. The CBO report said that as of 2019, the office’s portfolio was higher than $1 trillion.

Trump also acknowledged to reporters Thursday that such a decision on moving the loan office would be “the most complicated thing” to accomplish.

The president has been a vociferous critic of the Education Department, describing it last month as “a big con job,” and has noted that the United States has ranked relatively poorly compared with other developed nations despite the level of spending per each student.

New Education Secretary Linda McMahon, the former head of the Small Business Association and a former pro wrestling executive, released a statement this week on the “final mission” for the department and noted that Trump “has tasked us with accomplishing the elimination of bureaucratic bloat here at the Department of Education ... quickly and responsibly.”

She wrote: “Taxpayer-funded education should refocus on meaningful learning in math, reading, science, and history—not divisive DEI programs and gender ideology.”

One of Trump’s top advisers, Elon Musk, said in a post on his social media platform X last month that the Education Department has been able to become more efficient in recent days. As of Friday, according to a “leaderboard” provided by the Department of Government Efficiency (DOGE), it is currently ranked as No. 2 behind the General Services Administration.

The Associated Press contributed to this report.