US Treasury To Partner With Education Department To Collect Student Loan Debt
The U.S. Department of the Treasury and the Department of Education (ED) jointly announced a new partnership under which the Treasury will assume responsibility for collecting on defaulted federal student loan debt, according to a March 19 joint statement from the departments.
The Federal Student Assistance Partnership will enhance the administration of student aid programs, mitigate any fallout and cost to taxpayers from mismanagement of the federal student loan portfolio, and facilitate the return of defaulted borrowers to repayment.
“As student loan debt nears $1.7 Trillion, it’s clear that [the ED] was never intended to serve as our nation’s fifth largest bank,” U.S. Secretary of Education Linda McMahon said in a March 19 post on X. “That’s exactly why we are partnering with [the Treasury] to restore fiscal sanity and better align student aid programs with students, families, and borrowers.”
According to the statement, the Treasury will provide operational support to the ED’s efforts to return borrowers to repayment.
McMahon said that Treasury’s finance expertise will be leveraged to activate “functioning programs” that manage student loan borrowers who are in default.
Treasury has the unique experience, the operational capability, and the financial expertise to bring long overdue financial discipline to the program and be better stewards of taxpayer dollars,” U.S. Secretary of the Treasury Scott Bessent said of the new partnership.
Dismantling Education Department
The latest move by the ED is part of the Trump administration’s efforts to reduce the size of the federal department and return the function of education to the states.
McMahon had previously announced transferring certain key responsibilities to other government departments.
On Nov. 18, McMahon said that federal grant administration for K–12 schools and universities, including workforce development initiatives but not student loans, will be moved to the Department of Labor.
During a White House briefing on Nov. 20, McMahon said that the Labor Department’s system for grant administration is far more efficient than that used by the Education Department and would make the federal grant process more efficient.
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