Concerns rise over the future of key student loan relief programs, such as the SAVE Plan, PSLF expansions, and targeted debt cancellation. With the repeal of Biden-era policies, students and parents are uncertain about what comes next.
WASHINGTON, D.C. — President Donald Trump has directed the federal government to transfer oversight of the nation’s $1.6 trillion student loan program to the Small Business Administration (SBA), marking one of the most sweeping changes to federal education policy in decades.
In an executive order, signed on March 20, 2025, he initiated the process of dismantling the U.S. Department of Education, though doing so in full would require congressional action.
The shift moves student loan servicing for more than 40 million Americans from the Department of Education to an agency historically focused on small business lending.
“Student loans are financial instruments,” Trump said at the White House ceremony. “It makes sense to put them in the hands of the SBA, which knows how to manage lending programs successfully.”
SBA to Inherit Massive Loan Portfolio
The federal student loan system has long been managed by the Office of Federal Student Aid (FSA), a legally mandated division within the Department of Education. Its responsibilities include managing income-driven repayment plans, forgiveness programs, and borrower protections.
Under the executive order, these functions would transition to the SBA—an agency currently facing its own operational challenges. Earlier this month, the SBA announced plans to cut 43% of its workforce, eliminating approximately 2,700 jobs following the phase-out of pandemic-era business loan programs.
Critics warn that the SBA is unprepared to take on such a complex and high-volume program.
“The SBA doesn’t have the experience or infrastructure to handle the nuances of student loan repayment, forgiveness, or servicing,” said David Bergeron, a former senior official at the Department of Education. “This is incredibly messy.”
Legal Experts Question Authority
Although the executive order sets the transition in motion, legal experts emphasize that transferring statutory functions from one department to another—particularly one created by Congress—requires legislative approval.
“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, executive director of the Student Borrower Protection Center.
Advocacy groups are expected to file legal challenges aimed at blocking or delaying the implementation of the order.
What About Borrower Protections?
The move has also raised alarms among borrowers and education advocates who fear the rollback of key student loan relief programs implemented during the Biden administration. These included:
- The SAVE Plan, an income-driven repayment program designed to lower monthly payments and prevent ballooning interest,
- Public Service Loan Forgiveness (PSLF) expansions,
- Loan forgiveness for defrauded students and those with disabilities, and
- Over $189 billion in targeted debt cancellation for more than 5 million Americans.
With the SBA now poised to take over, the future of these programs is uncertain.
Borrowers Advised to Monitor Updates
For now, federal student loans remain under the Department of Education. Borrowers should continue making payments through existing servicers until formal changes are announced. No immediate disruptions have been reported, but agencies and watchdogs are urging the public to stay alert.
“We’re advising borrowers to stay informed, read official updates, and prepare for possible changes in how their loans are managed,” said a spokesperson from a national borrower advocacy group.
As legal challenges mount and federal agencies prepare for transition, the student loan shift could emerge as a defining policy issue — and a key test of how far executive power can stretch without congressional input.
