Mar
29
Treasury Takes Over Student Loans from Education Dept.
“[This] announcement continues to build on the department’s promise to streamline federal education functions and cut red tape.” — Madison Marino Doan and Jonathan Butcher, The Heritage Foundation
A little over a year ago, President Trump issued an executive order calling for the end of the U.S. Dept. of Education, which has existed only since 1980. (For what it’s worth, I am on record as being totally on board with this effort.) Since then, various interagency agreements have been entered into to facilitate the wind-down of this federal agency.
On Mar. 19, 2026, the tenth such agreement was made — this one between the Education Dept. and the Treasury Dept. In short, more responsibilities over college loans are shifting to Treasury’s purview, thereby simplifying the college lending process. As explained at The Daily Signal,
“Student loans make up two-thirds of the Education Department’s budget, and… 40% of borrowers are not making any payments on their loans. Student loan debt has ballooned to $1.7 trillion and affects more than 42.8 million student borrowers. For decades, the Treasury Department has worked with the Education Department to collect on defaulted student loans. Treasury also handles general debt collections through the IRS, all of which makes this agreement a logical move for student loans.”
Also, don’t forget that Biden’s pandemic-era policies — in particular, the student loan payment pause, which was extended six times — cost taxpayers $258 billion in forgone interest and other benefits. The new, income-driven Repayment Assistance Plan (enacted via the One Big Beautiful Bill Act), “requires accurate and timely income data from borrowers to function effectively, information that Treasury has access to.” Also,…
“The [financial] aid application [process] already requires information from students and their parents’ tax forms, and the Treasury already has this information because the agency collects it directly.”
In case you are wondering, there will be no “new ‘forgiveness’ policies that would transfer college loan debts to taxpayers.”
As you can see, this move really does make sense in terms of Treasury’s already-existing responsibilities and data access. As promised, the Education Dept. is being systematically, yet cautiously, being made superfluous.
For a few more details, including the three phases of the new ED/Treasury hand-over partnership, read this. Here is how the article concludes:
“Ultimately, the federal government should not be in the business of student loans. Such activity puts taxpayers at risk and has created a dysfunctional bureaucracy. The new interagency agreement begins repairing the harm to students and taxpayers.”
