Scott Statement on ED Transferring Defaulted Student Loans to Treasury
WASHINGTON – Ranking Member Robert C. “Bobby” Scott (VA-03), House Committee on Education and Workforce, issued the following statement after the Department of Education (ED) announced it intended to sign an additional interagency agreement to transfer partial responsibility for handling student loans in default to the Treasury Department.
“Since the Trump Administration returned to Washington, Secretary McMahon has executed President Trump’s goal to dismantle the Department of Education (ED) to the detriment of students and families. Today’s announcement marks yet another step by ED to shirk its responsibilities and offload another of its core functions— administering federal student loans.
“Specifically, ED intends to only transfer a portion of the student loan portfolio— borrowers who have defaulted on their loans. These borrowers need the most support, but they will now have limited access to the subject-matter experts at ED. Moreover, this transfer requires student borrowers who may be eligible for total discharge or other relief to discuss their situation with the people who don't have a clue about how the student loan program actually works. It’s unclear if the Trump Administration’s goal is to intentionally create chaos and confusion for these borrowers, many of whom are already in dire financial straits.
“ED has historically functioned as a one-stop shop for student borrowers, including financial services and advisors to assist with issues. Today’s transfer will likely add yet another administrative barrier to borrowers navigating an already opaque student loan repayment process. This is also happening just as borrowers are about to face new, harmful changes to the student loan program under Congressional Republicans’ ‘Big Ugly Bill’ and the ramifications of eliminating the SAVE plan.
“Moreover, the Trump Administration continues to disregard Congress’s Article I authority and dismantle ED one office at a time. This under-the-table transfer directly threatens the students, teachers, and families who depend on a fully functioning ED.
“As the cost of living continues to rise, Americans are already juggling student loan payments on top of groceries, gas, child care, health care, and housing. This is the last thing student borrowers need.”
Background: Today, notwithstanding statutes that require this office be established in ED, the Trump Administration announced that some student loan default activities will move to the Treasury Department and that the entire Office of Federal Student Aid (20 U.S.C. § 1018) will subsequently move to the Treasury Department in the near future. This marks the tenth interagency agreement since the Trump Administration returned to office, furthering its stated goal of dismantling ED.
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