Trump’s plan to transfer millions of student-loan accounts to the Treasury is in the works, officials confirm

• The Treasury has begun the process of taking over the accounts of defaulting student loan borrowers.

• It was stated that Ministry of Education employees will be sent to the Treasury to assist in the transition process.

• The agency did not offer a timeline for when it would officially assume management of the accounts.

Trump administration begins complex transfer process millions of student loan borrowers to a new agency.

Treasury Department confirmed an April letter The Department of Education is preparing to take over 9 million student loan accounts in default, Sen. Elizabeth Warren was told Monday.

The approval follows an announcement in March that student loan accounts would be transferred. to the treasury This will happen in phases, starting with defaulted accounts, with the goal of eventually transferring the remainder of the federal portfolio to the agency.

Deputy Treasury Secretary Mason Champion wrote in his letter that the transfer has so far “achieved two important milestones”; The first was a request from stakeholders for information on procurement agencies to assist defaulting borrowers with options for returning to good standing.

The second “landmark” was an agreement between the Departments of Treasury and Education to send seven Education employees to the Treasury and two Treasury employees to Education; Champion said this would “support the implementation of the partnership, initially focusing on the transition of operational responsibility for the defaulted portfolio to the Treasury”.

The letter did not specify a timeline for each phase, including the timing of the formal transfer of management. defaulted portfolio To the Treasury. Warren said in a statement that the deal “is bad for students and families, and I will do everything I can to fight against it,” adding that the department has provided no evidence that the transfer would improve borrowers’ outcomes.

Ministry of Education, in a letter “Treasury is well positioned to provide operational support for ED’s ongoing work to improve the administration of federal student aid programs,” he wrote to Warren alongside Treasury’s letter.

Transferring the student loan portfolio to the Treasury is part of the administration’s broader goal to: Ministry of Education. Former officials previously told Business Insider that turning student loans over to the Treasury could increase confusion for both borrowers and servicers; Arne Duncan, former President Barack Obama’s education secretary, said the move “makes no sense from an educational standpoint or from a customer service standpoint.”

In addition, the Department of Education paused involuntary collections on defaulted student loans in January; This means borrowers do not face wage garnishment or federal benefits garnishment. While the department hasn’t said when the pause will end, borrowers are likely to need extra help preparing for repayment, and moving their accounts to a new institution could jeopardize those efforts.

“Having systems that are spread across multiple institutions really puts the entire system at risk and will make it much harder not only to communicate with borrowers, but to make sure that we’re moving toward a more streamlined system,” said Sarah Sattelmeyer, education project director at left-wing think tank New America.

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