President Donald Trump announced on Friday that the two main functions of the agency he were looking for to dismantle, the Department of Education, will be moved to a new department: Small Business Administration will take student loans, and the Ministry of Health and Humanitarian Services will take special needs and nutritional efforts.
“I want to say that I have decided that SBA, a small business administration, led by Kelly Loeffler, [who] Is a great person, will handle all student loan portfolios, “he said.
“We have a very large portfolio, a lot of loans, tens of thousands of loans – a pretty complicated agreement. And it immediately came out of the Ministry of Education,” Trump said, adding that he was sure it would be “served much better” than before.
Student loans are currently supervised by the Federal Student Assistance Office in the Department of Education, and handle not tens of thousands of dollars in loans but loans of $ 1.6 trillion for 43 million people.
However, SBA, who already Handling billions of dollars in loans Every year, it has faced with a cut since Trump served, said it would be Reduce the staff by 43% In the midst of reorganization throughout the country.
SBA said that he would “eliminate around 2,700 active positions of the total active workforce of nearly 6,500 through voluntary resignation, the end of the Covid era and the promise of other terms, and a number of applicable reductions.”
The Federal Student Assistance Office employs more than 1,000 employees, but it is unclear whether this employee will move under the SBA or how the agency will handle the entry of loans to be managed.
President Donald Trump holds an executive order after signing it with the Secretary of Education Linda McMahon (R) in the east room of the White House in Washington, March 20, 2025.
Nathan Howard/Reuters
Trump noted that HHS Robert F. Kennedy Jr. will handle “special needs and all nutritional programs and others,” recognize that it is “rather complicated.”
“Both elements will be expelled from the Ministry of Education, and then what we have to do is ask students to get guidance from people who love them and respect them,” Trump said.
The President stated that the core function would remain intact.
“Pell grant, title 1, source of funds for children with disabilities and special needs will be preserved, fully preserved,” Trump said Thursday before signing the bill. “They will be fully preserved and distributed to various other institutions and departments that will take care of them very well.”
A sight showed a plaque during our school general meeting to protest the executive order of President Donald Trump to close the Department of Education outside his building in Washington, March 21, 2025.
Kent Nishimura/Reuters
The president does not offer details about how exactly the portfolio will be transferred to other institutions, only saying that it will happen “immediately.”
Executive Director of the Center for Student Reporting Mike Pierce condemned the President’s announcement, which said that educational supporters have created chaos and confusion in all educational landscapes.
“Moving student loan programs to SBA is illegal, not serious, and clear efforts to divert public attention from the fact that Trump has solved the student loan system and actively deceives millions of borrowers from their rights,” Pierce said in a statement to ABC News.
At least one component of the plan – moves the student loan system to other departments – is likely to face a significant legal pushback.
The central legal issue is likely to focus on the 1965 Higher Education Law, which stipulates that the Federal Student Assistance Office must be under the scope of the Secretary of Education.
“The congress has demanded the education secretary by managing the Federal Student Assistance Program by issuing student loans and grants to support the achievement of student tertiary education,” said Andrew Crook, Press Secretary for the American Teacher Federation. “The Department of Federal Student Assistance Office is legally mandated to do it and have unique expertise to manage complex student assistance programs.”
AFT President Randi Weingarten is more blunt: “See you in court,” he said in a statement after Trump signed an executive order on Thursday.
The protesters participated in “Study-in” in front of the US Department of Education, March 21, 2025 in Washington
Picture of Kayla Bartkowski/Getty
Even conservative policy experts such as Rick Hess, a senior at the American Enterprise Institute, said he hoped to see the challenges of the law because of higher education laws.
Hess supports the demolition of the department and says the Federal Student Assistance Office will be more suitable for different agents with more financial backgrounds.
This happened when the Ministry of Education cut almost half of his new workforce, touched the large piece of the Federal Student Assistance Office, which handled the student loan portfolio.
At the same time, Educational Secretary Linda McMahon promised to dismantle the agency altogether, in coordinating with the congress, or relocating its main function to other institutions.
James Kvaal, who works in the senior role in Obama and Biden’s governments, told ABC News that the higher education portfolio under President Barack Obama included moving several loan functions to the Ministry of Finance.
“Treasury has its own authority to collect debts, and they want to see if they can do better work with student loans than the Ministry of Education,” Kvaal told ABC News on Friday.
“And the answer is, no, they finally have a higher cost and collect less dollars for the Ministry of Finance. So, you know, the pilot is abandoned,” he added.
Educational Secretary Linda McMahon attended the signing of the executive order to close the Department of Education by US President Donald Trump, during the event at the East Room at the White House in Washington, March 20, 2025.
Chip Somodevilla/Getty Images
Therefore, Kval said that the current dilemma has a few gray -gray areas.
Meanwhile, he emphasized that student loan portfolios can re -portfolio can cause real world consequences.
“We are now at the point where millions of borrowers are late with their student loans,” he said. “In order for the department to focus on stopping half of its staff and through a fundamental reorganization of how they manage these programs, you know, in a very critical week for borrowers who try to enter the payment plan or get loan forgiveness, I think it is very dangerous and places millions of borrowers who experience default on their loans.”
Jessica Thompson, Vice President of the Senior Institute for College Access and Success, the borrowers underlined have experienced a “mountain problem” by paying their debts.
“This can only cause borrowers to face their federal student loan services that are problematic, inaccurate, and inconsistent,” Thompson said in a statement to ABC News. “Mistakes will be proven expensive for borrowers and, in the end, for taxpayers. All of which can be prevented.”