Education Department says Treasury will take over some federal student loan responsibilities

The Trump administration said Thursday the Treasury Department will take over some of the student loan responsibilities as it attempts to mitigate fallout from "the Biden administration's mismanagement of the Federal student loan portfolio."

The Treasury and Education departments launched the Federal Student Assistance Partnership, which will enhance oversight of federal student aid programs and help return defaulted borrowers to repayment.

The Education Department's student loan portfolio currently stands at nearly $1.7 trillion, according to the department, with less than 40% of borrowers in repayment and almost 25% of borrowers in default.

“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,” Education Secretary Linda McMahon said.

"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.

The Treasury Department is specifically tasked with collecting defaulted federal student loan debt and provide additional operational support to help get borrowers to start their repayments.

“Under President Trump’s leadership we are undertaking the first serious effort to clean up a $1.7 trillion portfolio that has been badly mismanaged for years," 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."

The change comes after the Trump administration announced last year that it was giving the Education Department's responsibilities to five different federal agencies as it aims to close the overarching department. 

Borrowers are not expected to take any additional actions under the new agreement and will continue paying their student loan servicer as normal.

Misty Severi is a news reporter for Just The News. You can follow her on X for more coverage.