Trump Says Student Loans Will Be Managed By Small Business Administration, Not Education Department

 

President Donald Trump speaks during an event in the Oval Office of the White House in Washington, DC, on March 21, 2025.

President Donald Trump said Friday the Education Department would no longer handle the federal government’s student loans, school nutrition and special needs programs, offering new details about how he plans to break down the agency a day after issuing an executive order aimed at closing the department.

Key Facts

Trump said the federal government’s $1.8 trillion student loan portfolio would be handled by the Small Business Administration, while school nutrition and special needs programs would be run by the Health and Human Services Department.

Trump made the announcement after signing an executive order Thursday designed to begin the process to shutter the Education Department and give states more control over education.

The federal government’s $1.8 trillion student loan portfolio will be “coming out of the Department of Education immediately,” Trump said, adding “it will be serviced much better than it has in the past. It’s been a mess.”

The White House said previously, prior to Trump signing the order, that “critical functions,” including Title I funding, Pell grants, student loans, special education funding and enforcement of civil rights laws would continue to be run by the federal government.

Chief Critic

Moving student loans to a different department, coupled with job cuts at the Department of Education, have prompted concerns from education advocates that the change could lead to complications in the system. “We are concerned that there is not a serious, detailed, thoughtful plan for reform around what to do with the student loan portfolio,” senior vice president at the nonprofit Institute for College Access and Success, Jessica Thompson, told CBS.

Key Background

Trump has long expressed plans to shut down the Education Department, appeasing conservatives who have argued for decades it’s a product of bureaucratic bloat. Prior to Trump’s executive order, the agency had already announced plans to slash staff in half, including among workers at the Office of Student Aid. The executive order directs Education Secretary Linda McMahon to take steps “to the maximum extent appropriate and permitted by law . . . to facilitate the closure of the Department of Education and return authority” to states and localities. Closing the agency entirely, however, would likely require congressional approval as it was created by statute under President Jimmy Carter in 1979. Such a move is unlikely to pass the Senate, where seven Democrats would need to join with all 53 Republicans to break filibuster.