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

[BumRushDaShow]

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

[sakabatou]

1. Ah, yes, more chaos, confusion, and so much more evil

[dweller]

2. Like they care ...

Biden worked hard to help students with programs like SAVE , and working to find forgiveness for those trapped in long loan repayment fiascos , and was stymied at every stage .
Now the malignant idiot and Fascism2025 is supposed to be better

Students will default on their loans , after all they had contracts with the Education Department not the SBA .


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[wyn borkins]

3. Student Loans

"Students will default on their loans; after all, the students had contracts with the Department of Education, not with the Small Business Administration (SBA)".

Perhaps the legal minds here on DU might address this anomaly...

[BumRushDaShow]

4. Everything he has done and continues to do is illegal

There are already several suits filed against the administration for this nonsense with the Dept. of Education. They keep thinking they can just move stuff around as if the federal government is "private industry" and we unfortunately have to deal with the slow pace of the courts to set the record straight to them.

(and as a note, IANAL but have had to take all kinds of government "law-related" courses during my federal career before I retired)

[wyn borkins]

5. Thank You

For your positive response...appreciations (!!!).

[BumRushDaShow]

6. Most welcome!

The below was the law that created the "Department of Education", which was signed into law by President Jimmy Carter in 1979.


S.210 - An act to establish a Department of Education, and for other purposes.

(the functions associated with "education" previous to that law, were originally under "HEW" - the Department of "Health, Education, and Welfare" )

When I had started at my HHS agency in the mid '80s, there was still a lot of stuff (forms, letterheads, guidance documents, etc.) around that referenced the old "HEW".

[Ford_Prefect]

13. What they will do is tuck enabling language into the budget or other critical legislative vehicle such that it will be

enabled under the cover of the issues that bill addresses. They may have already done in the massive budget package the House is teeing up to vote on.

[BumRushDaShow]

14. "What they will do is tuck enabling language into the budget"

That's what the GOP finally woke up and began to consider doing. I.e., to back-authorize all the illegal usurpation of THEIR role. But it's not there yet, and as long as they are fussing and fighting over the budget framework (let alone any details), the opposition to what is happening (which has actually become more bipartisan) will continue to build.

The House GOP now has its full compliment, and even with that, cannot lose more than 3 members to whatever they decide on.

[dweller]

7. I think you intended to reply to me ?

This article came out 3/21 … it’s quite a long read , and some here on DU said it was wrong . But it’s still under discussion at the substack where I read it .
https://www.thelongmemo.com/p/every-student-loan-is-now-forgiven?utm_source=multiple-personal-recommendations-email&utm_medium=email&triedRedirect=true


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[wyn borkins]

8. Apologies Offered

Yes, you are correct; I did indeed intend to respond to you directly...

[dweller]

9. No problem

Good luck with that article

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[wyn borkins]

10. Downloaded and Will (try to) Review it (all) :: Thank You (n/t)

[IbogaProject]

11. Part two is subscription only

Part two's introduction says probably not. Then says you have to pay up to read anymore.