Trump Proposes Shifting Student Loan Management to the Small Business Administration
In a bold move to restructure education management, President Trump announced plans to transfer the control of the federal student loan portfolio from the Department of Education to the Small Business Administration (SBA). This significant shift in responsibility comes amidst a series of administrative changes within the Department of Education.
During a recent appearance at the Oval Office, Trump stated, “I’ve decided that the SBA, the Small Business Administration, headed by Kelly Loeffler, a terrific person, will handle all of the student loan portfolio. We have a portfolio that’s very large,” he said, emphasizing the enormity of the task ahead.
The current federal student loan portfolio, which is managed by the Education Department’s office of Federal Student Aid (FSA), encompasses approximately $1.6 trillion in loans for about 43 million borrowers. However, the FSA has experienced significant staffing reductions due to recent buyouts and layoffs, raising questions about the transition of responsibilities to the SBA.
Trump expressed confidence in the SBA’s preparedness, stating, “They’re waiting for it. It’ll be serviced much better than it has in the past. It’s been a mess.” However, there remains ambiguity about how the transition will affect FSA employees and their expertise.
In a statement, Kelly Loeffler remarked, “As the government’s largest guarantor of business loans, the SBA stands ready to deploy its resources and expertise on behalf of America’s taxpayers and students.” Despite this assurance, the SBA is also planning a substantial reduction in its workforce, with a proposed cut of over 40%.
Legal complexities loom over the proposed transition, as the FSA’s role is protected by law, necessitating congressional approval for any significant changes. White House press secretary Karoline Leavitt noted, “The President has always said Congress has a role to play in this effort, and we expect them to help the President deliver.”
Uncertainty Surrounds Management of ‘Special Needs’ Programs
In addition to student loans, Trump announced that “Bobby Kennedy, the Health and Human Services [secretary], will be handling special needs,” referring to the administration of the Individuals with Disabilities Education Act (IDEA). Currently, IDEA is managed by the Education Department and provides $15 billion annually to support special education services.
Senator Patty Murray called the proposed changes “a clear violation of education & appropriations law” in a post on Bluesky. Similar to the student loan portfolio, the transfer of responsibilities for special education services without congressional approval remains legally uncertain.
Health and Human Services Secretary Robert F. Kennedy expressed readiness in a post on X, stating that his agency “is fully prepared to take on the responsibility of supporting individuals with special needs.”
This development follows Trump’s executive action directing Education Secretary Linda McMahon to initiate steps for the closure of the Department of Education, signaling a comprehensive reevaluation of federal education oversight.
