Student Loans and Higher Education Finance

The Trump administration has begun Phase 1 of a three‑phase interagency transfer moving roughly $180 billion — about 11% of the $1.7 trillion federal student‑loan portfolio — from the Education Department to the Treasury, which will resume collections on defaulted loans; officials say about 9.2 million borrowers are in default and 2.4 million are in late‑stage delinquency, and borrowers are being told to take no action and will keep the same servicers during the initial shift. Education Secretary Linda McMahon framed the move as correcting decades of mismanagement and breaking up the federal education bureaucracy, while union leaders and legal observers say federal law requires Education oversight and the transfer — the 10th interagency reassignment under the Trump administration — is likely to prompt legal challenges.