President Donald Trump announced Friday that two key functions of the agency he is seeking to dismantle, the Department of Education, will be moved to new departments: The Small Business Administration will take on student loans, and the Department of Health and Human Services will take on special needs and nutrition efforts.
“I do want to say that I’ve decided that the SBA, the Small Business Administration, headed by Kelly Loeffler, [who] is a terrific person, will handle all of the student loan portfolio,” he said.
“We have a portfolio that’s very large, lots of loans, tens of thousands of loans — pretty complicated deal. And that’s coming out of the Department of Education immediately,” Trump said, adding that he believes it will be “serviced much better” than it has been.
Student loans are currently overseen by the Federal Student Aid Office within the Department of Education, and it handles not tens of thousands of dollars in loans but $1.6 trillion in loans for 43 million people.
Trump noted that Robert F. Kennedy Jr.’s HHS will handle “special needs and all of the nutrition programs and everything else,” conceding that it’s “rather complex.”
“Those two elements will be taken out of the Department of Education, and then all we have to do is get the students to get guidance from the people that love them and cherish them,” Trump said.
The president maintained that the core functions would remain intact.
“Pell Grants, Title 1, funding resources for children with disabilities and special needs will be preserved, fully preserved,” Trump said Thursday before signing the bill. “They’re going to be preserved in full and redistributed to various other agencies and departments that will take very good care of them.”
The president did not offer any details about how exactly those portfolios would be transferred to other agencies, saying only that it would happen “immediately.”
At least one component of the plan — moving the student loan system to another department — is likely to face significant legal pushback.
The central legal issue is likely to focus on the Higher Education Act of 1965, which stipulates that the Federal Student Aid Office should be under the purview of the secretary of education.
“Congress has charged the secretary of education with administering the federal student aid program by issuing student loans and grants to support students’ attainment of higher education,” said Andrew Cook, press secretary for the American Federation of Teachers. “The department’s office of Federal Student Aid is statutorily mandated to do so and has the unique expertise to manage the complex student aid program.”
AFT President Randi Weingarten was more blunt: “See you in court,” she said in a statement after Trump signed the executive order on Thursday.
Additionally, the SBA, which already handles billions of dollars in loans each year, has faced its own cuts since Trump took office, saying it would reduce its staff by 43% amid agencywide reorganization.
The SBA said it would “eliminate approximately 2,700 active positions out of a total active workforce of nearly 6,500 through voluntary resignations, the expiration of COVID-era and other term appointments, and a limited number of reductions in force.”
The Federal Student Aid Office employs over 1,000 employees, but it is unclear whether these employees would move under the SBA or how the agency would handle an influx in loans to manage.
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