The Trump administration has announced a series of plans to reassign significant functions of the U.S. Department of Education to other federal agencies, a move that includes the transfer of federal student loan portfolio management to the Treasury Department. These initiatives aim to shift responsibilities for areas such as elementary and secondary education, postsecondary education, Indian education, and the nation's nearly $1.7 trillion student loan portfolio, with the administration stating objectives to improve efficiency and leverage specialized expertise across federal agencies.
Reassigning Education Department Functions
Scope of General Transfers
The administration has outlined plans for the reassignment of various Education Department functions, which encompass responsibilities for programs originally established by Congress in 1979. These transfers are proceeding without explicit congressional consent for the specific reassignments. The agreements involve the transfer of day-to-day operational duties for several congressionally mandated programs, while a limited number of staff are expected to remain within the Education Department for these specific functions.
Key Program Reassignments
Key transfers announced include:
- U.S. Department of Labor: Set to assume work from the Office of Elementary and Secondary Education, including the management of Title I, and a portion of the Office of Postsecondary Education's responsibilities. The Labor Department previously assumed responsibility for adult education and family literacy programs in July.
- U.S. Department of the Interior: Expected to take over the majority of functions from the Office of Indian Education.
- U.S. Department of State: Will manage international education and foreign language studies programs.
- U.S. Department of Health and Human Services (HHS): To become responsible for the Child Care Access Means Parents in School (CCAMPIS) program.
Federal Student Loan Portfolio: A Major Shift
In a separate but related initiative, the administration announced a three-phase plan to transfer the management and responsibility for the nation's federal student loan portfolio from the Education Department to the U.S. Treasury Department. This marks the tenth interagency agreement dispersing the Education Department's responsibilities.
The Three-Phase Transfer to Treasury
The agreement details the following phases for the student loan transfer:
- Phase One: The Treasury Department will resume control of collecting on defaulted student loans. As of early March, 9.2 million borrowers were in default, with an additional 2.4 million in late-stage delinquency.
- Phase Two: Treasury's management will expand to include servicing a substantial portion of the Education Department's non-defaulted debts, following an assessment of practicability.
- Phase Three: The Treasury Department will assume administration of the Free Application for Federal Student Aid (FAFSA), a key component for students seeking federal financial aid. The Treasury Department currently contributes to FAFSA through its data-retrieval tool for income verification.
Education Department officials indicated that borrowers "should see no change" and that the transition "should be seamless."
Administration's Rationale
Education Secretary Linda McMahon articulated the administration's strategy, stating it would "peel back the layers of federal bureaucracy by partnering with agencies that are better suited to manage programs and empowering states and local leaders to oversee the rest." She further noted that "these partnerships are commonplace across the federal government to improve service delivery and increase efficiency."
Regarding the student loan transfer, Secretary McMahon stated that the Education Department "failed to effectively manage and deliver" these programs, and leveraging Treasury's financial expertise would result in "functioning programs after decades of mismanagement." The transition is also viewed as aligned with President Trump's broader objective to reduce the size of the Education Department.
Legal and Congressional Opposition
Opponents of these changes, including Rachel Gittleman, president of AFGE Local 252 (representing Education Department employees), assert that the White House lacks the legal authority to transfer functions of offices created and explicitly placed within the Education Department by Congress without congressional approval.
Gittleman stated the administration is "unlawfully dismantl[ing] the Education Department" and that the Education Secretary lacks the authority to do so without congressional approval.
Education Department officials have maintained that the statutory responsibilities for these programs would remain with the department, even if the operational work is conducted by other agencies. They also acknowledged that the Treasury Department cannot fully assume all statutory student loan obligations and that Congress is the sole entity with the power to close the department.
The legality of maintaining a reduced departmental staff in partnership with other agencies, regarding compliance with federal law, remains a subject of scrutiny, and legal challenges opposing these moves are anticipated. Lindsey Burke, the department's deputy chief of staff for policy and programs, who led a briefing on the transfers, previously co-authored the education section of Project 2025, a conservative blueprint that advocates for the elimination of the U.S. Department of Education.
Excluded Responsibilities
Certain core responsibilities of the Education Department, such as special education and student civil rights enforcement, are not included in these current agreements for general function transfers.