"President Donald Trump has taken the first steps toward dismantling the Department of Education and directed Education Secretary Linda McMahon to “begin eliminating” the decades-old Cabinet department," The Independent reports.

..."Even if the Education Department shuts its doors, there is no indication federal student loan programs will disappear — and recipients will still need to repay loans, according to Karen McCarthy, vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators."

"Another agency — such as the Treasury Department — could absorb the Education Department’s $1.7 trillion loan portfolio if it shuts down."

"Trump’s executive order directly hints at this, noting: 'The Department of Education is not a bank, and it must return bank functions to an entity equipped to serve America's students.'"

"But such a massive transition could prove disruptive to borrowers, according to McCarthy."

"'It would be an entirely new undertaking for Treasury, and so if that were to happen, it seems really unlikely that untangling all of that and redistributing the work of federal student aid in the student loan servicing space would proceed either quickly or without any disruptions,' McCarthy told The Independent."

... "To prepare for the potential transition, McCarthy says borrowers should update their information with their loan service and get on a feasible repayment plan as soon as possible."

"'Any of those paperwork things that you're dealing with with your loan servicer, if there's any of that you've been putting off ... I would absolutely try to get all of those things taken care of,' McCarthy said. 'And if you are able to, get yourself into a repayment plan that you anticipate will work for you long term.'"

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

Publication Date: 3/20/2025