Plan to Get Rid of Department of Education Creates Chaos
President Trump’s recent proposal to dismantle the U.S. Department of Education in the
name of “efficiency” and “cost savings” ignores that the Department holds $1.64 trillion
in student loan portfolio. According to an article published by CNN, experts are warning
of potential chaos in the student loan system. 1
Over 33 million Americans holding federal student loans, which the Education
Department’s financial arm is responsible for managing. Of course, this Department is
already facing significant staff reductions and uncertainty fueled by the chaotic and
slapdash methodology of the so-called “Department of Government Efficiency.” This
instability comes at a critical time when more than 40% of loans are currently
delinquent, a multitude of federal workers are losing their jobs, the economy cannot get
its bearings due to the waffling tariff-no-tariff games of the administration. Fears of a
wave of new student loan defaults are realistic.
The Trump administration throwing out options for managing the student loan portfolio,
including transferring responsibility to other agencies such as the Treasury, Commerce,
or Small Business Administration. However, none of these proposals are as simple as
they seem. Each of these departments has its own focus and expertise, none of which
primarily involves managing student loans on such a massive scale.
Financial experts and education advocates are sounding the alarm about the potential
consequences of these changes. They predict widespread confusion, increased
delinquencies, and a surge in defaults as borrowers navigate this new landscape with
reduced support and guidance. However, one thing is certain: a quick, unplanned, and
ill-advised dismantling of the Department of Education is neither efficient nor likely to
lead to financial savings for the U.S. Government.
