President Donald Trump announced on Friday that two key functions of the agency that seeks to dismantle, the Department of Education, will be transferred to new departments: the administration of small businesses will assume student loans, and the Department of Health and Human Services will take special needs and nutritional efforts.
“I mean that I have decided that the SBA, the administration of small businesses, headed by Kelly Loeffler, [who] He is an excellent person, he will handle the entire student loan portfolio, “he said.
“We have a portfolio that is very large, many loans, tens of thousands of loans, a quite complicated treatment. And that comes out of the department of education immediately,” Trump said, adding that he believes that it will be “served much better” than it has been.
The federal federal federal aid office on the Department of Education is currently supervised, and manages not tens of thousands of dollars in loans but $ 1.6 billion on loans for 43 million people.
However, the SBA, which already Handles billions of dollars on loans Every year, he has faced cuts since Trump took office, saying he would Reduce your staff by 43% in the middle of the reorganization of the entire agency.
The SBA said that “it would eliminate approximately 2,700 active positions of a total active workforce of almost 6,500 through voluntary resignations, the expiration of the Covid era and other term appointments, and a limited number of reductions in force.”
The Federal Student Association uses more than 1,000 employees, but it is not clear if these employees would move under the SBA or how the agency would handle an influx of loans to manage.
President Donald Trump has an executive order after signing it together with the Secretary of Education Linda McMahon (R) in the East of the White House in Washington, on March 20, 2025.
Nathan Howard/Reuters
Trump said Robert F. Kennedy Jr.’s HHS will handle “special needs and all nutrition programs and everything else”, admitting that it is “quite complex.”
“These two elements will be taken from the Department of Education, and then all we have to do is get the students to obtain guidance from the people who love them and appreciate them,” Trump said.
The president said that the central functions would remain intact.
“Pell subsidies, Title 1, financing resources for children with disabilities and special needs will be completely preserved,” Trump said Thursday before signing the bill. “They will be preserved in its entirety and redistributed to other agencies and departments that will take care of them very well.”
An opinion shows a poster during a defense of our schools to protest the executive order of President Donald Trump to close the USDepartment of Education outside his building in Washington, on March 21, 2025.
Kent Nishimura/Reuters
The president offered no detail about how these portfolios would be transferred exactly to other agencies, saying that it would only happen “immediately.”
The executive director of the Student Protection Center, Mike Pierce, condemned the announcement of the president, that the Defenders of Education have said that he has created chaos and confusion throughout the educational landscape.
“Moving the student loan program to the SBA is illegal, little deserving, and a clear attempt to distract the public from the fact that Trump has broken the student loan system and is actively cheating millions of borrowers of their rights,” Pierce said in a statement to ABC News.
It is likely that at least one component of the plan, transfer the student loan system to another department, in front of a great legal setback.
It is likely that the central legal problem will focus on the Higher Education Law of 1965, which stipulates that the Federal Student Assistance Office must be under the scope of the Secretary of Education.
“Congress has accused the Secretary of Education of the Federal Student Aid Program by issuing students and student subsidies to support the higher education of students,” said Andrew Crook, press secretary of the American Federation of Masters. “The Federal Student Assistance Office of the Department has the mandate to do so and has the unique experience to manage the Student Aid Complex.”
The president of AFT, Randi Weingarten, was more forceful: “See you in court,” he said in a statement after Trump signed the executive order on Thursday.
Protesters participate in a “study” in front of the United States Department of Education, March 21, 2025 in Washington
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Even conservative policies such as Rick HESS, main member of the American Enterprise Institute, said they hope to see legal challenges due to the Higher Education Law.
HESS supports the dismantling of the department and has said that the Federal Student Aid Office would be better for a different agency with more financial experience.
This occurs when the Education Department reduced almost half of its workforce recently, destroying large pieces of the Federal Student Aid, which manages the student loan portfolio.
At the same time, the Secretary of Education, Linda McMahon, promised to dismantle the agency completely, in coordination with Congress or reallocate its key functions to other agencies.
James Kvaal, who worked in senior roles in the administrations of Obama and Biden, told ABC News that his higher education portfolio under President Barack Obama included transferring some loan functions to the Department of the Treasury.
“The treasure had its own authority to collect debts, and they wanted to see if they could do a better job with student loans than the Department of Education,” Kvaal told ABC News on Friday.
“And the answer was, no, they ended up having higher costs and raising less dollars for the treasure. Then, you know, the pilot was abandoned,” he added.
The Secretary of Education, Linda McMahon, attends the signing of an executive order to close the education department of the president of the United States, Donald Trump, during an event in the East Room of the White House in Washington, on March 20, 2025.
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Because of this, Kvaal said the current dilemma has some gray area.
Meanwhile, he emphasized the relocated student loan portfolio could again lead to real world.
“Now we are at a point where millions of borrowers are late for their student loans,” he said. “For the department to focus on saying half of its staff and going through a fundamental reorganization of how it manages these programs, you already know, in really criticism for weeks for borrowers trying to enter payment plans or obtaining loan forgiveness, I think it is very dangerous and puts a risk of millions of borrowers of breach of breach of their extensions.”
Jessica Thompson, senior vice president of the Institute for Access and Dirt of the University, underlined borrowers are already experiencing a “mountain of problems” with the payment of their debts.
“This can only lead to borrowers who face a problematic, inaccurate and inconsistent service of their federal student loans,” Thompson said in a statement to ABC News. “Errors will be expensive for borrowers and, ultimately, for taxpayers. All of which can be prevented.”
