President Donald Trump said Friday that the Small Business Administration, instead of the U.S. Department of Education, would handle the country’s federal student loan portfolio.
“We have a portfolio that is very large, lots of loans, tens of thousands of loans, pretty complicated deal,” Trump said, speaking to reporters in the Oval Office. “That’s coming out of the Department of Education immediately.”
“They’re all set for it,” the president said of the SBA. “They’re waiting for it.”
Outstanding federal education debt exceeds $1.6 trillion, with more than 40 million Americans holding student loans.
Trump’s announcement comes a day after he signed an executive order aimed at dismantling the Education Department. Only Congress can unilaterally eliminate the agency.
Consumer advocates are worried that the mass transfer of accounts could trigger errors, or compromise borrowers’ privacy. They also raised concerns about how a change in agency might affect protections and programs such as Public Service Loan Forgiveness.
Trump said earlier this month that his administration was looking to task any of the Treasury Department, Commerce Department or the Small Business Administration with federal student loan management.
Experts said the most logical agency would have been the Treasury Department since it already plays a role in collecting past-due debts from Americans through the Treasury Offset Program.
Meanwhile, “neither Commerce nor SBA has any relevant experience,” higher education expert Mark Kantrowitz told CNBC this month.
One important thing for borrowers to keep in mind: The terms and conditions of your federal student loans cannot change even if the agency overseeing them does, experts say. Your rights were guaranteed when you signed the master promissory note at the time your loans were originated.
