As Trump considers ways to dismantle the Education Dept., here's what to know about your student loans

NBC News

04-02-2025

With the Trump administration looking for ways to close parts or all of the U.S. Department of Education, many of the country's 42 million federal student loan borrowers are likely feeling on edge.
One of the Education Department's functions is underwriting the loans that enable millions of people each year to attend college and graduate school. It also administers the country's $1.6 trillion outstanding education debt tab.
'The anxiety levels are pretty high for borrowers right now,' said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.
Closing the agency would require an act of Congress, experts say.
Still, Trump administration officials are considering an executive order that could halt parts of the agency, The Wall Street Journal reported Monday. On the campaign trail, President Donald Trump said shuttering the department would be a priority.
'The President plans to fulfill a campaign promise by revaluating the future of the Department of Education,' said a White House spokesperson.
Former President Jimmy Carter established the U.S. Department of Education in 1979. Since then, the department has faced other existential threats, with former President Ronald Reagan calling for its end and Trump, during his first term, attempting to merge it with the Labor Department.
Efforts by the Trump administration to dismantle the Education Department likely will face criticism.
To that point, 61% of likely voters say they oppose the Trump administration's use of an executive order to abolish the Education Department, according to a poll conducted by Data for Progress on behalf of the Student Borrower Protection Center and Groundwork Collaborative. Just 34% of respondents approve of such a move. The survey of 1,294 people was conducted Jan. 31 to Feb. 2.
Here's what the possible changes to the department could mean for student loan borrowers.
What would happen to my student loans?
Even if the Education Department no longer existed, student loan debt would still be due, Mayotte said.
'Just because the entity that manages the loan changes, it in no way changes the terms [of the loan],' she said.
For example, mortgages often get sold to other companies, and millions of student loan borrowers have recently had their accounts transferred to another servicer, Mayotte added.
The Treasury Department would be the next most logical agency to administer student debt, Mayotte said.
It's also possible that the Justice Department or the Department of Labor could carry out some of the Education Department's functions, according to a blog post by The National Association of Student Financial Aid Administrators.
Meanwhile, some Republicans have expressed interest in privatizing the federal student loan system, higher education expert Mark Kantrowitz said. This prospect worries consumer advocates, who point out that students need extra protections that are not required of private lenders.
The federal student loan system is already plagued by problems, said Michele Shepard Zampini, senior director of college affordability at The Institute For College Access and Success. Transferring the loan accounts of tens of millions of people to another agency would only make things worse, she said.
'Borrowers and students need more stability, and this would create chaos,' Shepard Zampini said.
Financial aid for new and current students could be delayed
New and current students who rely on financial aid for college would likely experience delays if the Education Department is partially or fully shut down, Shepard Zampini said.
That would be a major problem for families, she said.
'People can't go to college without student loans, unfortunately,' Shepard Zampini said.
Kantrowitz agreed.
'Disruption is bad, very bad,' Kantrowitz said. 'During a transition, federal student aid might not become available for weeks or longer.'