President Donald Trump announced plans to transfer two key functions of the Department of Education, which he seeks to dismantle. The Small Business Administration will take over responsibility for student loans. Meanwhile, the Department of Health and Human Services will manage special needs and nutrition programs.
Trump stated that Robert F. Kennedy Jr.’s Department of Health and Human Services (HHS) will oversee “special needs, all nutrition programs, and everything else,” admitting that it’s “rather complex.”
“These two functions will be taken out of the Department of Education, and then all that’s left is to make sure students receive guidance from those who truly care for them,” Trump said.
Student loans are currently managed by the Federal Student Aid Office, which operates under the Department of Education. This office is responsible for overseeing a massive amount of debt, totaling $1.6 trillion in loans, which are held by 43 million borrowers, rather than just dealing with smaller amounts like tens of thousands of dollars.
“I want to mention that I’ve decided the Small Business Administration, led by Kelly Loeffler, a terrific person, will take over the entire student loan portfolio,” Trump said.
“We have a huge portfolio with many loans—tens of thousands, it’s a pretty complicated situation. And that will be moved out of the Department of Education immediately,” he continued, adding that he believes the loans will be “managed much better” than they have been.
The president emphasized that the core functions would remain unchanged.
“Pell Grants, Title 1, funding for children with disabilities and special needs will be fully preserved,” Trump said Thursday before signing the bill. “These will be preserved in full and transferred to other agencies and departments that will manage them very effectively.”
The Small Business Administration, which is responsible for managing billions of dollars in loans each year, has faced budget cuts since Trump assumed office. As part of a broader reorganization, the agency revealed plans to reduce its staff by 43%.
The SBA stated that it would “cut approximately 2,700 active positions out of a total workforce of nearly 6,500” through voluntary resignations, the expiration of COVID-era and other temporary appointments, and a limited number of layoffs.
The Federal Student Aid Office currently employs over 1,000 people, but it is unclear whether these employees would be reassigned to the Small Business Administration or how the SBA would manage the significant influx of loans it would be responsible for overseeing. The situation raises questions about how the agency would handle the increased workload and ensure smooth operations.
The main legal challenge is likely to revolve around the Higher Education Act of 1965, which clearly states that the Federal Student Aid Office should be managed by the secretary of education. This provision could present significant legal obstacles if efforts are made to transfer the office’s responsibilities to another department, such as the Small Business Administration.
