The Trump administration has moved decisively toward dismantling the federal Department of Education, announcing a historic interagency agreement that moves student loan operations to the Treasury Department. The transfer puts Treasury in a position to manage defaulted federal student loans and support repayment efforts, which officials have called the biggest step yet in a multiphase plan to redistribute the department’s responsibilities.Officials say the move is intended to streamline federal programs, reduce taxpayer losses, and demonstrate that the department is not required to administer student aid. “I think we were very clear last week that this is a multiphase process,” Nicholas Kent, the undersecretary for education, told Fox News Digital.
Treasury takes operational control of student loans.
The agreement assigns the Treasury full operational responsibility for collecting defaulted federal student loans and providing operational assistance to borrowers for repayment. Andrew Gallen of the Cato Institute emphasized the importance of the transfer, telling Fox News Digital, “While it’s a student loan transfer—it’s the largest staff and largest budget in the Department of Education. So, if it’s sent to the Treasury, it really indicates that it’s moving a substantial portion of the Department of Education elsewhere.”Kent echoed that analysis, telling Fox News Digital, “To describe this as the next and biggest step in dismantling the Department of Education is the right way to think about it.”
A campaign promise becomes a policy.
The move fulfills President Donald Trump’s campaign promise to dismantle the Department of Education. During the 2024 campaign, Trump signed an executive order directing his administration to begin dismantling the agency. Kent explained to Fox News, “The secretary is on the record saying that these interagency agreements are a proof of concept, that we want to show Congress, that we want to show families, that we want to show moms and dads and families that the Department of Education doesn’t need to continue here with federal grant aid and federal student loan borrowers.”“
streamlining aid and reducing costs;
Management framed the change as a way to reduce bureaucracy and improve efficiency. The department reports that federal student loans are now about $1.7 trillion, with less than 40 percent of borrowers in repayment plans and about 25 percent in default.“This will benefit students by streamlining the process of applying for aid and repaying student loans and will save taxpayers money by reducing losses on student loans,” Gallen told Fox News. Once this move is complete, the largest education budget and staffing needs will be handled elsewhere, making closing the Department of Education more feasible.”Secretary of Education Linda McMahon called for broader reform in a press release, “Cutting layers of red tape in Washington is an essential part of our ultimate mission. As we partner with these agencies to improve federal programs, we will continue to gather best practices in each state through our 50-state tour, empower local leaders in Congress with higher education, and empower local leaders for higher education.” Will make these corrections.“
Proof of concept of closure
Kent detailed the progress made over the past year to Fox News Digital. Shut down the department and fire yourself.“With student loan responsibilities shifting to the Treasury, officials contend that a significant portion of the Education Department’s core functions will be outsourced to the agency, bringing the federal government closer to what many see as the end game: a completely bankrupt department.
