President Trump’s executive order on Thursday was Dismantling of the Ministry of Education Experts say it can disrupt the federal government’s student loan program and cause frustration to millions of borrowers.
Education Department The remit is wide. The agency manages student loans for over 40 million Americans. It oversees $18 billion of Title I funding for primary and secondary education in low-income regions. Pell’s grants are issued to help low- and middle-income students pay the university. Manage free applications for federal student aid. This allows students to apply for loans, grants and other university aid.
“To manage that asset, including staff trained to ensure that borrowers have good information, you need resources to manage that asset,” says Peter Granville, a higher education finance expert and a fellow at the Century Foundation, a progressive think tank. “We need the technical expertise that only educational staff can possess.”
Ahead of Thursday’s signing ceremony for Trump’s order, White House spokesman Caroline Leavitt told reporters that the education department was “a lot smaller than today.” She said at the time that the agency would maintain supervision of student loans and Pell grants for now.
Trump said in a statement from the oval office on Friday that the Small Business Administration (SBA) would expect to monitor student loans.
“SBA, Small Business Administration has decided to handle all of its student loan portfolios. We have a very large portfolio of loans,” Trump said.
Trump administration officials previously said such programs would eventually be transferred to other federal agencies, such as the Treasury Department, the Commerce Department, and the SBA.
“Closening the department does not mean cutting off funds from those who rely on them. We will continue to support K-12 students, students with special needs, university borrowers and other people who rely on other critical programs.” “We will responsibly eliminate bureaucracy by following the law and working through Congress to ensure a legal and orderly transition.”
The Trump administration wants to dismantle the education sector, but removing it entirely would require Congressional acts – an important political hurdle considering most Senate laws need to get 60 votes to pass and pass 60 votes.
“Chaos Recipe”
Despite the Trump administration’s expectations of smooth winds in the education sector, experts warn that administrative challenges are important when transferring student loan surveillance from one part of the government to another. They also note that before Friday the White House had not announced plans to oversee student loans when the education sector shrinks, or did not specify which departments will inherit duties.
“To move instantly from the Department of Education where you already live and move it to the Department of Treasury will not pass the Sniff test,” Jessica Thompson, senior vice president of the University Access and Success Institute and senior vice president of a nonprofit focused on education policy, told CBS MoneyWatch. “We are concerned that there is no serious, detailed, thoughtful plan for reforms on what to do with our student loan portfolio.”
Granville agreed to the assessment. Dote the education department before clarifying plans to reallocate student loan monitoring is “not a recipe for efficiency or innovation,” he said. “This is a recipe for the confusion and frustration of millions of people who rely on student loan programs.”
The Trump administration has already cut staff in the education sector in half and rejected employees tasked with managing their $1.6 trillion student loan debt.
“The department is already understaffed and the width and depth of last week’s shootings have brought great questions about its ability to serve more than 40 million borrowers,” Thompson said.
She points to the long wait times that Americans facing student loans face are facing reaching agency staff over the phone. “We were already in a situation where customer service needs to be improved, so there is no way we can think of it as breaking the institutional expertise that happened last week and has no impact,” Thompson said.
It could lead to confusion for current and future student borrowers seeking information on obligation payments and other service issues currently being handled by the education sector. Thompson is also concerned that a sudden vacuum of such information could lead to a surge in loan defaults.
“Now they can’t make calls, get advice, or ask questions about how much they’re paying for a loan.
“(w)e ​​has little commitment and ability to help borrowers pay back, and is barreling towards another student’s default crisis,” Granville added.
