Student Loans Headed to Treasury Department

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The U.S. Treasury Department will take over management of defaulted federal student loans, according to a new agreement announced by the Trump administration. This is part of a broader plan to dismantle the Education Department by relocating its operations to other federal agencies.

Why it matters

The transition of student loan management from the Education Department to the Treasury Department represents a significant shift in how the federal government oversees the $1.7 trillion student debt portfolio. This move could impact how borrowers interact with and repay their loans going forward.

The details

Under the new 17-page agreement, the Treasury Department will initially take over management of the 9.2 million Americans who are in default on their student loans. Eventually, the Treasury is expected to assume responsibility for all federal student loans, though no timeline has been set for that second phase. Borrowers will continue working with the same loan servicers and repaying loans the same way during the transition. The administration has also delayed plans to resume involuntary collections on defaulted federal student loans.

• The Treasury Department will take over management of defaulted student loans under the new agreement announced on March 20, 2026.
• There is no set timeline for the Treasury Department to assume responsibility for all federal student loans in the second phase of the transition.

What’s next

The Treasury Department will assume operational responsibility over non-defaulted student loans in a second phase of the transition, though no timeline has been set for when that will occur.