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Trump Proposes Major Changes to Federal Student Loan Office
WASHINGTON – President Donald Trump on Thursday suggested significant changes to the federal office that manages the government’s nearly $2 trillion student loan portfolio.
Speaking to reporters at the White House, Trump said he has considered relocating the Federal Student Aid (FSA) office, which administers loans for millions of borrowers, to another government agency. He argued that the Education Department should not be responsible for overseeing student loans.
“That’s not their business,” he said.
Trump specifically mentioned the Small Business Administration (SBA) as a potential new home for the FSA. The SBA, which provides financial support and counseling to entrepreneurs, was previously led by Linda McMahon during Trump’s first term. She was confirmed Monday by the U.S. Senate as the new Secretary of Education.
Kelly Loeffler, a former Republican senator from Georgia and the current head of the SBA, has expressed interest in taking over the student loan portfolio, Trump said.
“Kelly really liked it and would like to do it,” he added.
However, such a move would require congressional approval, and given the Senate’s filibuster rules, Democratic support would be necessary—making the proposal unlikely to succeed. Trump also acknowledged the complexity of the transition.
“The Federal Student Aid office is the most complicated thing to move,” he admitted.
Uncertainty Over the Future of the Education Department
Trump’s comments come amid broader discussions about the future of the Education Department itself. A White House official told USA TODAY that the president is still considering an executive order to reevaluate the agency’s role.
A draft executive order obtained by USA TODAY directs the education secretary to close the department “to the maximum extent appropriate and permitted by law.” However, it remains unclear whether the administration is still pursuing this plan.
Federal Student Aid Office Facing Workforce Declines
The FSA office has already seen a significant reduction in staff. Internal documents reviewed by USA TODAY show that roughly 10% of employees accepted buyout offers inspired by Elon Musk’s “Fork in the Road” strategy. Additionally, last Friday, the Education Department offered all staff members up to $25,000 to resign or retire by the following Monday.
Meanwhile, Project 2025, a conservative policy blueprint that has influenced many of Trump’s decisions, has also proposed transferring the FSA office to the Treasury Department instead.
Some financial aid experts have expressed skepticism about such a large-scale transition. Karen McCarthy, vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators, compared the challenge to merging two massive banks.
“Nobody could really imagine that Chase could fold into Citibank quickly or easily,” she said.
Contributing: Joey Garrison
Zachary Schermele is an education reporter for USA TODAY. You can reach him at [email protected]. Follow him on X at @ZachSchermele and Bluesky at @zachschermele.bsky.social.
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