Experts say White House's rehoming of student loan program will put borrowers at risk

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Source: The Guardian

Sun 6 Apr 2025 06.00 EDT
Last modified on Sun 6 Apr 2025 14.27 EDT


The Trump administration’s rehoming of the federal student loan program is putting student borrowers at a higher risk of defaulting on their loans and may not save the government the money that it is claiming it will, experts say. After the president vowed to dismantle the education department and make student loans a part of the Small Business Administration, student financial aid groups suggest that borrowers could find themselves in hot water because the SBA does not have experience with such loans and is on track to lose almost half its staff.

The move to put student loan debt under the SBA umbrella also comes on the heels of recent changes to and reversals of borrower repayment plans – most notably the Saving on a Valuable Education (Save) Plan. Additionally, it’s arriving in tandem with rising costs of living around the US. “This is a recipe for millions of borrowers getting poor service and having no one to protect them,” said Michael Negron, who worked on student debt for the National Economic Council during the Biden administration.

Some in Washington previously expected Donald Trump to move the federal student aid office to the treasury department, as that was the Heritage Foundation’s recommendation in its conservative policy blueprint Project 2025, which has shaped much of the administration’s agenda.

But Trump said on 21 March that the management of student loans would instead shift to the SBA “immediately” – just one day after the White House press secretary said the education department would continue to oversee the program.

Read more: https://www.theguardian.com/us-news/2025/apr/06/student-loans-trump-small-business-association