Treasury Department begins taking over student loans as the Education Department gets dismantled

Source: AP

Updated 5:36 PM EDT, March 19, 2026


WASHINGTON (AP) — The U.S. Education Department is handing off a portion of its student loan portfolio to the Treasury Department, a first step toward shedding management of all student loans as Trump administration officials dismantle the federal education agency.Under an agreement announced Thursday, the Treasury Department will take over management of student loans whose borrowers are in default, meaning they are months behind on payments.

Those loans add up to about $180 billion, or 11% of the government’s $1.7 trillion student loan portfolio. Eventually, the Treasury Department is to take responsibility for all student loans, according to the agreement. A second phase with no timeframe says Treasury will “assume operational responsibility” over non-defaulted loans, “to the extent practicable.”

Breaking off the student loan operation would mark the biggest step yet in closing the department, which President Donald Trump ordered to be dismantled almost exactly a year ago. Many Americans know the department mostly for its role doling out grants and loans for college, and those streams of funding are by far the agency’s largest.

Borrowers do not need to do anything as the change goes through, the administration says. They will continue to work with the same loan servicer and repay their loans the same way.

Read more: https://apnews.com/article/student-loans-debt-education-treasury-department-014f9b51100226048335d053cc21e9f1