During his campaign, President-elect Donald Trump proposed abolishing the United States Department of Education. If the Education Department was shut down, then the management of federal student loans and other programs could fall to different government departments or even a government corporation. If the latter came to pass, it could also mean that certain borrower protections would cease to exist.
Key Takeaways
- While on the campaign trail, President-elect Donald Trump repeatedly proposed closing the U.S. Department of Education.
- Without the Education Department, other government departments or a government corporation would likely be placed in charge of federal student programs.
- If a government corporation becomes responsible for managing federal student loans, then there’s a good chance that certain borrower protections would no longer be available.
How Federal Education Programs Would Chang
Even if the Department of Education is shuttered, the federal government would still play much the same role in the education system. In all likelihood, its operations would simply be passed to one or more of the other government agencies. The Department of Justice, Department of Labor, or Treasury Department have each been previously suggested as candidates for taking on some of the Department of Education’s responsibilities.
This is almost exactly what Project 2025, a conservative policy written by former members of and collaborators with the first Trump administration, proposes. While Trump’s own Agenda47 doesn’t offer a concrete plan for replacing the Education Department, this document outlines how each of the Department of Education’s offices and programs could be redistributed to other agencies.
Trump has publicly denied having any knowledge of Project 2025, calling the Heritage Foundation’s (the think tank behind Project 2025) plans “absolutely ridiculous and abysmal.”
Despite this, Trump previously said during a conference the Heritage Foundation is “going to lay the groundwork and detail plans for exactly what our movement will do.” Additionally, he’s nominated several people involved in Project 2025 for positions in his second administration, including Russell Vought, Stephen Miller, Karoline Leavitt, Brendan Carr, and Tom Homan.
One of the more notable recommendations is spinning off the Office of Federal Student Aid’s obligations to a new government corporation. Federal student loans would be overseen by the Treasury, which would also manage collections and defaults. This new federal student loan authority would be tasked with managing the loan portfolio, administering loan applications and disbursements, issuing regulations, etc.
How Borrower Protections Would Change
A government corporation is an agency that’s owned by the government but operates like a private business. If student loans end up being managed by an entity that’s essentially a for-profit, private lender, then there’s a chance federal student loans may become more like their private counterparts.
Private student loans usually charge higher interest rates, for example, and they also tend to have fewer borrower protections. Federal student loans offer several different student debt forgiveness options, including Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans.
Private student loans don’t typically offer debt forgiveness, and they don’t always allow for deferment or forbearance if you’re having trouble paying back your loans. As a result, this puts borrowers at a greater risk of becoming delinquent or defaulting on their loans.
The Bottom Line
The Department of Education can’t be shut down without a 60-vote supermajority from the Senate. During the 2024 election, Republicans gained four extra seats and now hold a 53-47 majority. That would mean every Republican senator as well as at least seven from other parties would be needed to abolish the Education Department.
While the Department of Education may not actually be going anywhere, the President can likely still reassign enough of the department’s main responsibilities so as to effectively render it defunct. As we wait to see how the next four years shake out for the Education Department, federal student loan borrowers would be wise to stay on top of their student loan payments and try to repay their debt as fast as they feasibly can.
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