ED Transfers Defaulted Loan Collection Duties to Treasury

"With roughly nine million student borrowers in default, the Treasury Department will "assume operational responsibility for collecting" on those loans, the Education Department announced Thursday. The move is ED's latest effort to render itself obsolete as part of the Trump administration's plan to eliminate the department. This is the 10th interagency agreement it has signed to share with or spin off functions to other federal agencies."

"Officials outlined a three-part plan to shift most non-policy-related responsibilities over the $1.7 trillion student loan portfolio to Treasury "to the extent practicable and permitted by law," but the timing of the second and third phases wasn't specified. For now, Treasury is just taking over debt collections on defaulted loans."

"Yet only Congress, which created the department by law decades ago, has the power to delete it. It didn't do so when Republicans had stronger majorities last year, and it will likely be less inclined to kill it if Democrats gain seats in this year's midterm elections."

The Education Department announced that Treasury will take over debt collection operations for roughly nine million student borrowers in default. This represents the tenth interagency agreement ED has signed to transfer functions to other federal agencies as part of a broader Trump administration initiative to eliminate the department. A three-phase plan aims to shift most non-policy responsibilities of the $1.7 trillion student loan portfolio to Treasury "to the extent practicable and permitted by law," though timing for subsequent phases remains unspecified. The announcement has generated concerns among consumer protection advocates and congressional Democrats about the student loan program's future, while critics supporting ED's closure view it as progress toward that goal.

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