House Republicans propose transferring student-loan accounts to Treasury

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Student loans to Treasury proposal

Highlights

House education committee unveils 10 bills to codify transferring student-loan account management from the Education Department to Treasury, beginning with defaulted loans.
Treasury Secretary Scott Bessent claims his department offers better operational capacity and financial expertise to oversee the student-loan program than Education.
Critics, including the AFGE Local 252 president, warn legislation could add administrative complexity and uncertainty for both federal workers and student borrowers.

Legislative plan for agency transfer

As reported by Business Insider, the House education committee unveils 10 bills on Thursday to codify the administration's plan to "right-size" the Education Department and reassign key duties across government.

Committee chair Rep. Tim Walberg says in a statement that the measures are intended to remove layers of bureaucracy and place statutory authorities with agencies that are better equipped to carry them out. The proposal follows an agreement announced in March between the Education and Treasury departments that sets out a phased transfer of student-loan accounts.

Under that agreement, defaulted student-loan borrowers' accounts move first, while later phases aim to shift management of non-defaulted accounts to Treasury. Ellen Keast, the department's press secretary for higher education, says in a statement that the legislation formalizes what she calls commonsense partnerships to reduce federal education bureaucracy and improve outcomes for students.

Operational questions and policy impact

The administration argues that Treasury is better positioned to oversee federal student loans. Education Secretary Linda McMahon says in a March statement that the Education Department has failed to manage student-loan programs effectively, while Treasury Secretary Scott Bessent says his department has the operational capability and financial expertise to impose stronger discipline on the program.

Education policy experts and former administration officials, however, say there is limited evidence that Treasury has the systems needed to handle complex repayment programs. The agencies do not comment on how quickly the transfer begins, although Treasury tells lawmakers in an April letter that it has started preparing to take over the defaulted student-loan portfolio.

Rachel Gittleman, president of AFGE Local 252, which represents Education Department employees, says in a Friday statement that the bills would create more red tape for the public and for federal workers serving students and families. The proposals keep student lending at the center of a broader debate over how far the federal government should go in restructuring education policy administration.

In our earlier article on the shake-up at the U.S. Election Assistance Commission (EAC), we covered the administration’s removal of remaining commissioners just months before the midterm elections. We noted that the move intensified political and legal scrutiny over federal control of election administration and raised concerns about the commission’s capacity to oversee election funding and voting-system certification.

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