Trump Administration Transfers Student Loan Accounts to Treasury

The Trump administration has initiated the phased transfer of federal student-loan accounts from the Department of Education to the Department of the Treasury. The transition began with the launch of the Defaulted Loans Support Center, an online portal designed to replace a paper-based system and streamline the process for borrowers in default to return to good standing.

Education Secretary Linda McMahon stated the Education Department "was never intended to serve as the fifth largest bank in America," while Treasury Secretary Scott Bessent said the move brings financial expertise to the program to provide borrowers a "clearer path back to repayment." The Treasury is expected to eventually oversee non-defaulted loans as well.

Over 60 Democratic lawmakers and former officials have opposed the move, questioning the Treasury's capacity to manage the $1.7 trillion portfolio. The transition occurs as student loan defaults rise, with 9.3 million borrowers in default as of June 30, though involuntary collections remain paused.