Warren Calls for Rescinding Student Loan Transfer to Treasury

Senator says move threatens to 'trap' borrowers in 'chaos and bureaucracy'

Apr. 2, 2026 at 5:21pm

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Senator Elizabeth Warren, D-Mass., is petitioning the Department of Education to stop its transfer of federal student aid services to the Department of Treasury, arguing the move is illegal and will harm millions of Americans who rely on the expertise of federal student aid civil servants.

Why it matters

Warren's campaign to defend public education has triggered federal investigations and legal actions opposing the Trump administration's overhaul of the Education Department, which she says has raised costs for borrowers and undermined public schools since taking office.

The details

The most recent agreement includes sending the nearly $1.7 trillion student loan portfolio to Treasury through a multi-phase process to procure the financial aid programs. Warren and other Democratic senators argue this violates the Consolidated Appropriations Act of 2026, which funds the administration of federal student aid and student loan servicing through the Department of Education.

  • Thursday marks the one year anniversary of Warren's 'Save Our Schools' campaign.
  • The interagency partnership was reached in March 2026.

The players

Elizabeth Warren

A Democratic senator from Massachusetts and ranking member of the Senate Banking, Housing, and Urban Affairs Committee.

Linda McMahon

The Secretary of Education under the Trump administration.

Scott Bessent

The Treasury Secretary under the Trump administration.

Ellen Keast

The Department of Education Press Secretary for Higher Education.

Andrew Gillen

A researcher at the libertarian think tank Cato Institute's Center for Educational Freedom.

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What they’re saying

“The Trump Administration continues to move forward with illegal Interagency Agreements (IAAs) dismantling the Education Department (ED). This latest illegal scheme from the Trump Administration threatens to trap student loan borrowers, students, and families in chaos and bureaucracy, all while American taxpayers are left to foot the bill for Treasury to administer programs that ED can and should administer itself, likely costing more money and burying borrowers and families in unnecessary red tape.”

— Elizabeth Warren, Senator

“We are confident that our partnership with the Treasury, an experienced and proven fiduciary, will strengthen program administration and better serve American students, borrowers, and taxpayers.”

— Ellen Keast, Department of Education Press Secretary for Higher Education

“This will benefit students by streamlining the aid application and student loan repayment processes and save taxpayers money by reducing losses on student loans.”

— Andrew Gillen, Researcher, Cato Institute's Center for Educational Freedom

“For too long, borrowers have been failed at every turn — they don't deserve to be failed again by an agency that isn't ready to protect them.”

— Aissa Canchola Bañez, Policy Director, Protect Borrowers

What’s next

The judge in the case will decide on Tuesday whether or not to allow the transfer of student loan services to the Treasury Department to proceed.

The takeaway

This case highlights the ongoing battle over the future of the Education Department and federal student aid programs, with Democrats accusing the Trump administration of illegally dismantling the agency and putting borrowers at risk, while the administration argues the changes will streamline and improve services.