Trump says that the student loans system goes to SBA but can face legal challenges

President Donald Trump speaks during an event at the Oval Blanche office in … More Washington, DC, on March 21, 2025. Trump announced that he will transfer the federal student loan system of the Ministry of Education to Small Business Association. (Photo of Annabelle Gordon / AFP) (photo of Annabelle Gordon / AFP via Getty Images)

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On Friday, President Donald Trump unexpectedly announced that he would move the entire federal student of student loans from the United States Ministry of Education at Small Business Association.

IVE has decided that SBA, the Small Business Administration, led by Kelly Loeffler, will manage the entire student loan portfolio, Trump told the journalists in the oval office. The transfer will occur immediately, he said.

Trumps' declaration occurs one day after issuing an order to close the Ministry of Education, which most legal experts agree that one cannot be done without authorization from the Congress. He also occurs after the Trump administration has made repeated insurance that the ministry would continue to administer the federal student loans system. Defenders have expressed increased concerns that the dismantling of the Ministry of Education is probably illegal and will result in massive disturbances of the federal student loan programs, including reimbursement plans focused on income and the delivery of loans to students, which are already faced with unprecedented disorders.

Trumps The transfer of the federal student of student loans is ordering to close the Ministry of Education

The unexpected unexpected announcement that the federal student loans system is transferred to Small Business Association occurs less than 24 hours after publishing a decree to close the Ministry of Education.

The Congress created the Ministry of Education in 1979 at the request of President Jimmy Carter, who received a very first presidential approval from the largest teachers' union shortly after promising the union for a separate department of education, reads order. Since then, the Ministry of Education has rooted the bureaucracy of education and has sought to convince America that federal education control has been beneficial. “The order continues, the closure of the Ministry of Education would provide children and their families the possibility of escaping a system that fails them.

While the president signed the order, the press secretary of the White House, Karoline Leavitt, told journalists, with regard to student loans and Pell's subsidies, they will always be short of the Ministry of Education. “”

Likewise, the Ministry of Education published a press release earlier this month announcing mass licensees that have said that the Ministry of Education will continue to deliver all the statutory programs that fall under the agency, including the financing of the formula, student loans, Pell subsidies, financing of students with special needs and competitive subsidies.

But Trumps' announcement Friday contradicts these insurance directly.

Advocacy groups warn the massive disruptions of forgiveness and reimbursement of student loans

Defense groups for student loans have learned the alarm that the Ministry of Education and the transfer of its operations to other agencies that have no experience with the nations of the federal loans to students can lead to deep disturbances for borrowers.

When the federal government accidentally bills a student loan borrower $ 5,000 per month instead of $ 50 or when a predatory student loan service illegally removes multiple payments from debtors, there will be little or no appeal for workers to recover their money due to the current Trump administration decision, “said Braxton Brewington, spokesperson for the demand for the request. Mediator and team specially designed to help the tens of millions of workers' Americans with one of their largest monthly bills have been dismissed.

History tells us that the dismantling of the Ministry of Education, the end of the programs that help students learn and mix the remaining programs among other agencies will not repair anything, said Abby Shafroth, codirector of defense of the National Consumer Law Center in a statement this week. What he will do is eliminate education as a national priority; Create ineffectiveness and disorders in federal educational programs; And making citizens more difficult to keep the federal government responsible for the way it supports does not support education and the excellence of education in the United States.

Borrowers are already facing important problems in the vast federal student of student loans. The safeguard plan, a new reimbursement program focused on income promulgated by former President Joe Biden who provided reduced payments and an end to the execution of flight interests, remains blocked by a court order, which led to millions of borrowers unable to pay their student loans. Earlier in March, the Ministry of Education suddenly closed the reimbursement system focused on income by removing requests and issuing a loan order to stop all the processing of the request. This has made millions of borrowers are unable to register for reimbursement plans to which they are legally entitled to access, while others have been cut off student loans programs such as the PSLF or experience massive peaks in monthly payments.

Meanwhile, a repair for borrowers suffering from medical disabilities who are entitled to a release under the federal law are unable to receive a because the total and permanent disability outing program remains in a pause status following a change in long-term service platform. It is not known how the president prevails on the recent announcement of the transfer of the federal student of student loans to SBA will have an impact on this program.

The closure of the Ministry of Education and Transfer of the Federal Student Loan System to SBA can cause legal challenges

The actions of the Trump administration to dismantle the Ministry of Education can lead to legal challenges. The Congress has created the Ministry of Education through legislation, and most legal experts agree that it would take an act of congress to dismantle it. Likewise, the federal laws adopted by the congress specifically designate the Ministry of Education to administer and implement reimbursement and delivery programs to students for federal borrowers; The displacement of student loan operations to the departments to other agencies of the federal government can violate the law.

Some defenders' defense organizations have already threatened to continue the Trump administration.

The real effect of this decree will be more difficulties and chaos for students and families, said National Student Legal Defense Network in a tweet on Friday. We will stop this in court.

Moving the Student Loan Program to the SBA is Illegal, Unserious, and a Clear Attempt to Distract the Public from the fact that Trump has Broken the Student Loan System and is Actively Cheating Millions of Borrowers Out of Their Rights, “Said Mike Pierce, Student Borrower Protection Center Executive Director, Donald Trump, Linda McMahon, and Kelly Loeffler, including Have to Worry About Whother They Can Afford to Send Their Kids to College Or How They Will Stay On Top of their invoices.

First and foremost, the approval of the Congress is necessary to transfer the management of the SBA loan portfolio, Jesica Thompson, main vice-president of the Institute of College Access & Success on Friday, in a press release. There is no noticeable reason to do so. It will not benefit from borrowers or taxpayers in general. Other concerns, the administration has also announced today a 40% reduction in staff at the top of the 50% personnel reduction which has already taken place at the Ministry of Education. Without a clear strategy, the administration has decimated personnel and surveillance capacities in the two agencies while simultaneously announcing its intention to immediately transfer a loan portfolio of more than $ 1.5 billion between them. This can only lead to borrowers to undergo erratic and inconsistent management of their federal student loans. Errors will prove to be expensive for borrowers and, ultimately, taxpayers.

The Ministry of Education already concerns several legal challenges concerning the recent Trump administration actions. This week, the American Federation of Teachers brought legal action on the decision of the departments to withdraw requests for reimbursement plans focused on income and to block new registrations in affordable payment plans that the ministry is held under the law to offer borrowers. And earlier this month, a group of states led by Democrats has filed a legal challenge to stop administration efforts to dismiss almost half of the staff of the departments, including many who help manage the federal student loans system.

The author has already worked with the National Student Legal Defense Network on an unrelated case. This article was updated on March 21, 2025 to include the declarations of the Student Borrower Protection Center and the Institute of College Access & Success on the transfer of student loan announced to the SBA.

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