Donald Trump accused the Education Department of ‘failing’ the general public
Donald Trump has signed an executive order to eradicate the Department of Education amid a plan to ‘shut it down as quickly as possible’ – so what does that mean for student loans?
Every year, millions of Americans rely on student loans, leaving the Department of Education with a substantial amount of outstanding debt—a figure that has only continued to rise in recent years.
According to data analyzed by higher education expert Mark Kantrowitz and reported by CNBC, outstanding student loan debt soared from around $1.59 trillion at the start of 2021 to approximately $1.64 trillion by the end of 2024. With Trump back in the Oval Office this January, he wasted no time criticizing the Department of Education, labeling it a “breath-taking failure.” Then, on March 20, he signed an executive order aimed at dismantling the department.
So, what exactly does Trump’s order entail?
The president claims that the federal control over American education has been an “experiment” that has “plainly failed.” He argues that by shutting down the Department of Education, children and families will be given the opportunity to escape a failing system. The order outlines that “The Department of Education is not a bank, and it must return banking functions to an entity capable of better serving America’s students.” Trump insists that the department’s primary functions should be shifted to state governments, allowing states more autonomy over educational decisions. However, Congress would need to take action to fully dissolve the department.
What does the order mean for student loans?
While many may hope that the dissolution of the Department of Education will erase student loan debt, that’s not the case. Several potential outcomes have emerged regarding how loans will be handled following Trump’s order, with White House Press Secretary Karoline Leavitt sharing some insights on what could happen next.
Loans will remain under a scaled-down version of the Department
Leavitt has indicated that even if the Department of Education is scaled back, a smaller version of the department could continue overseeing federal student loans. In this case, loans would still be managed by the government, but the department’s scope and size would be reduced.
Loans could be taken on by a different department
Trump has been vocal about his belief that the Department of Education should not be responsible for handling student loans. In his view, another government agency should take over this responsibility. “I don’t think the Education [Department] should be handling the loans. That’s not their business,” Trump stated.
Possible candidates for managing the loans include the Treasury Department, Commerce Department, or the Small Business Administration, all of which Trump has suggested as potential new home bases for student loan management.
Delays to Loan Forgiveness
Trump’s order, coming on the heels of the Biden administration’s push for loan forgiveness, could lead to disruptions for many former students awaiting relief. As Mark Kantrowitz points out, while there are services that assist with the paperwork for loan forgiveness, the Department of Education has traditionally had the final say in approving all student loan forgiveness applications. With the department now being scaled down or potentially dissolved, any ongoing applications could face significant delays, leaving many in limbo as they await a resolution.
