Department of Education announces transfer of student loans to Treasury
According to the agency headed by Linda McMahon, the student loan portfolio totals nearly $1.7 trillion. In turn, less than 40% of borrowers are current, and 25% are in default.
Linda McMahon outside the Supreme Court/ Oliver Contreras.
The Department of Education announced the start of transfers of federal student loans to the Treasury Department. As part of the Trump administration's plan to shrink the size and scope of the Department of Education, the move is the latest change to further restructure the functions of the agency led by Linda McMahon.
Initially, the Treasury will begin taking on the cases of borrowers who are in default, although it will eventually also absorb the administration of those who are current.
According to the Department of Education, the student loan portfolio amounts to almost $1.7 trillion. In turn, less than 40% of borrowers are current and 25% are in default. The agency pointed out that the Department of Education "was never intended to serve as our nation's fifth largest bank."
">As student loan debt nears $1.7 Trillion, it’s clear that @USEdGov was never intended to serve as our nation’s fifth largest bank.
— Secretary Linda McMahon (@EDSecMcMahon) March 19, 2026
That’s exactly why we are partnering with @USTreasury to restore fiscal sanity and better align student aid programs with students, families and… pic.twitter.com/fUFZANAw0a
"The Federal Student Assistance Partnership marks an intentional and historic step toward breaking up the Federal education bureaucracy and dramatically improving the administration of Federal student aid programs that millions of American students, families, and borrowers rely on to access higher education," Secretary McMahon said in a statement released Thursday afternoon.
"Americans know that the Department of Education has failed to effectively manage and deliver these critical programs. 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," she added.
Scott Bessent, secretary of the Treasury, welcomed the move and assured that his agency has "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."
In March 2025, Donald Trump signed an executive order to begin the "dismantling" of the Department of Education. While the elimination of the agency would need to pass through Congress, the president seeks to limit its scope as much as possible and transfer most of its functions to the states or other agencies.
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