President Donald Trump announced on Friday that two key functions of the agency whom he sought to dismantle, the Ministry of Education, will be transferred to new departments: the administration of small businesses will grant student loans, and the Ministry of Health and Social Services will have special needs and nutritional efforts.
“I mean I decided that SBA, Small Business Administration, led by Kelly Loeffler, [who] is a great person, will manage the entire student loan portfolio, “he said.
“We have a very important portfolio, a lot of loans, tens of thousands of loans – a fairly complicated affair. And that immediately leaves the Ministry of Education,” said Trump, adding that it will be “much better”.
Student loans are currently supervised by the Federal Student Aid Office within the Ministry of Education, and it does not manage tens of thousands of dollars in loans, but 1.6 billion of loans for 43 million people.
However, the SBA, which already manages billions of dollars in loans Each year, has faced cuts since Trump took up his duties, saying that Reduce personal by 43% In the middle of the agency’s scale reorganization.
The SBA said that it “would eliminate approximately 2,700 active positions on a total active workforce of almost 6,500 through voluntary resignations, the expiration of nominations in the era of COVID and other terms, and a limited number of strength reductions”.
The Federal Student Aid Office employs more than 1,000 employees, but it is not clear if these employees would move under the SBA or how the agency would manage an influx of ready to manage.
President Donald Trump has a decree after having signed him alongside the Education Secretary Linda McMahon (R) in the eastern house in the White House in Washington, on March 20, 2025.
Nathan Howard / Reuters
Trump noted that the HHS of Robert F. Kennedy Jr. will manage “special needs and all nutrition programs and everything else,” conceding that it is “rather complex”.
“These two elements will be withdrawn from the Ministry of Education, then all that we have to do is bring students to obtain advice from people who love them and cherish them,” said Trump.
The president argued that the basic functions would remain intact.
“Pell subsidies, title 1, financing resources for disabled children and special needs will be preserved, fully preserved,” said Trump on Thursday before signing the bill. “They will be kept entirely and redistributed to various other agencies and departments which will take great care of them.”
An opinion shows a sign during a gathering of defense of our schools to protest against the executive decree of President Donald Trump to close the USDEPARTMENT of education outside his building in Washington, on March 21, 2025.
Kent Nishimura / Reuters
The president did not propose any details on how these portfolios would be transferred to other agencies, affirming only that this would happen “immediately”.
The executive director of the Student Borrower Protection Center, Mike Pierce, condemned the announcement of the president, who, according to the defenders of education, created chaos and the confusion in the landscape of education.
“The moving of the student loan program in SBA is illegal, not unbalanced and a clear attempt to distract the public because Trump has broken the student loans system and actively deceive millions of borrowers of their rights,” Pierce said in a press release in ABC News.
At least one component of the plan – the displacement of the student loans system to another department – is likely to deal with significant legal repression.
The central legal question is likely to focus on the 1965 law on higher education, which stipulates that the Federal Student Aid Office should be noted from the Secretary of Education.
“The Congress charged the Secretary for Education to have administered the Federal Aid for Students Program by issuing student loans and subsidies to support students of higher education,” said Andrew Crook, press secretary of the American teachers’ federation. “The office of the Ministry of Federal Aid to Students is statically mandated to do so and has the unique expertise to manage the complex student aid program.”
The rear president, Randi Weingarten, was more frank: “Come to court,” she said in a statement after Trump signed the decree on Thursday.
The demonstrators participate in a “study” before the American department of education, March 21, 2025 in Washington
Kayla Bartkowski / Getty Images
Even experts in conservative policy such as Rick Hess, principal researcher at the American Enterprise Institute, said that he expects to see legal challenges because of the Higher Education Act.
Hess supports the dismantling of the department and said that the Federal Student Aid Office would be better suited to a different agency with more financial training.
This occurs while the Ministry of Education has reduced almost half of its workforce recently, which violated the big pieces of the Federal Student Aid Office, which manages the student loan portfolio.
At the same time, the Secretary of Education Linda McMahon undertook to completely dismantle the agency, in coordination with the congress, or to reassign its key functions to other agencies.
James Kvaal, who held senior positions in Obama and Biden administrations, told ABC News that his higher education portfolio under President Barack Obama included the use of certain loan functions in the Treasury Department.
“The treasure had its own power to cover the debts, and they wanted to see if they could do a better job with student loans than the Ministry of Education,” KVAAL told ABC News on Friday.
“And the answer was, no, they ended up having higher costs and collecting fewer dollars for the treasure. So you know, the pilot was abandoned,” he added.
Educational Secretary Linda McMahon attended the signing of an executive decree to close the Ministry of Education by US President Donald Trump, during an event in the East House in the White House in Washington on March 20, 2025.
SOMODEVILLA / GETTY Images chip
For this reason, Kvaal said that the current dilemma has a little gray area.
Meanwhile, he pointed out that the resumption of the student loan portfolio could again have actual consequences.
“We are now at a time when millions of borrowers are late on their student loans,” he said. “In order for the department to focus on setting up half of its staff and the fundamental reorganization of the way it administers these programs, you know, in really critical weeks for borrowers who are trying to embark on reimbursement plans or forgive the loan, I think it is very dangerous and puts a risk of millions of denunciation on their loans.”
Jessica Thompson, main vice-president of the Institute for academic access and success, stressed that borrowers are already experiencing a “mountain of problems” with the reimbursement of their debts.
“This can only lead to borrowers confronted with a problematic, inaccurate and inconsistent service of their federal student loans,” said Thompson in a statement at ABC News. “Errors will prove to be expensive for borrowers and, ultimately, to taxpayers. All of this is avoidable.”
