The Trump administration has taken a major step toward downsizing the Department of Education (ED) by transferring operational responsibility for student loan collections to the Treasury Department, according to a release issued Thursday. This move marks the largest shift in staffing and budgetary responsibilities from the ED to another federal agency, signaling a step closer to the administration's long-stated goal of eliminating the department.

A Multipronged Transition

Nicholas Kent, Undersecretary of Education, confirmed this interagency agreement as part of a broader effort to reduce the department's footprint. 'We've been very clear that this is a multiphase process,' Kent stated, emphasizing that the agreement demonstrates the feasibility of eliminating the ED while ensuring the continuation of federal grant aid and student loans. He noted that over the past year, the department has already reduced its size by more than 40%.

Implications for Taxpayers and Borrowers

Andrew Gillen of the Cato Institute highlighted the significance of this transfer, stating, 'This is the biggest staffing and budgetary component of the Department of Education. Moving it to Treasury indicates a substantial portion of the department is being relocated.' The shift aims to streamline student loan repayment processes and mitigate costs to taxpayers, particularly in light of the Biden administration's mismanagement of the federal student loan portfolio.

'Cutting through layers of red tape in Washington is one essential piece of our final mission,' said Secretary of Education Linda McMahon.

The ED emphasized that nearly $1.7 trillion in student loans are owed, with less than 40% of borrowers on repayment plans and almost 25% in default. Gillen added, 'This will benefit students and save taxpayers money by reducing losses on student loans.'

Long-Term Vision

The interagency agreement is part of a broader strategy to reduce federal bureaucracy and return educational oversight to state and local levels. 'We will continue to gather best practices in each state through our 50-state tour, empower local leaders in K-12 education, restore excellence to higher education, and work with Congress to codify these reforms,' McMahon stated. Kent characterized the move as 'the next and largest step toward winding down the Department of Education.'