President Trump announced Friday that the education sector will either not manage the country's $1.6 trillion student loan portfolio or oversee the “special needs” program with a massive reform of the agency he has tried to eliminate.
Trump said student loans will move under the Small Business Administration and special education services will move under the Department of Health and Human Services along with the nutrition program.
Trump told reporters that he had gathered in an oval office. The move will be made “quickly,” adding that the restructuring, which critics have swiftly vowed to challenge in court, “will do very well.”
“They're going to be much better than they were in the past. It was a mess,” he said of the loan. He added: “You're going to get a much better education than you are now and get a great education at half the cost.”
Trump laid the foundation for his announcement Thursday with an executive order aimed at closing the education sector. The department cannot be closed without Congressional approval. However, since Trump took office, his administration has cut more than half the departmental workforce and eliminated $600 million in grants.
Education experts and union officials have questioned Trump's authority to do so unilaterally, especially in the case of student loans, but repositioning such key functions would charge further into the institution. Many suggested that the outcome was not a better service – there was only more confusion for the borrower.
White House spokesperson Karoline Leavitt on Thursday insisted that major programs like student loans will run out of education, despite being far more lean. On Friday, she called out Congress to clarify which functions would be in motion and the legal authority Trump had to transfer them.
“President Trump is doing everything within his executive branch to dismantle the Department of Education and bring education back to the state, while protecting key students and families functions, including student loans, special needs programs and nutrition programs,” she said. “The President has always said that Congress has a role to play in this effort. We hope they will help the President deliver.”
High-ranking Republicans in Congress have already pledged to introduce laws to support Trump's efforts to eliminate the education sector.
Beth Maglione, interim president and chief executive of the National Association of Student Financial Aid Administrators, said it was “unknown” whether Trump could move the aid program away from the department. She suggested that even if it was approved by Congress, it would require time and careful planning.
“The administration must first clarify a critical strategy that outlines how administrative work for student aid programs is allocated within the SBA, determining the staffing and resources needed, and building the necessary infrastructure to facilitate the transition of these programs to another federal government,” she said. “There remains a serious concern if there is no comprehensive plan. How will this reorganization be carried out without disrupting students and institutions?”
In the executive order, the president compared the size of his federal student loan portfolio with the size of bank Wells Fargo. Wells Fargo had over 200,000 employees, but only 1,500 people worked for the Federal Student Aid Office in the education department.
“The Department of Education must return banking capabilities to entities equipped to serve American students, not banks,” the order states.
On Thursday, Trump pledged that legally mandated funds and resources for students who attend high-poor schools and rely on federal grants, as well as “resources for children with special disabilities and special needs” will be preserved, even if everything is hampered according to his plan.
He showed that this was important to Linda McMahon, the secretary of education for Trump, who served as SBA administrator in his first term.
The restructuring, announced by Trump on Friday, will move some of the biggest programs the education sector has handled to institutions that have minimal involvement in schools and experience reduced staffing.
The SBA, led by Kelly Loeffler, announced Thursday it would cut 43% of its approximately 6,500 workers, while the HHS, led by Robert F. Kennedy Jr., provided acquisitions to most of its approximately 80,000 employees.
SBA representatives did not immediately respond to requests for comment. In a social media post, Loeffler said:
The student loan acquisition will significantly expand the size of the SBA's annual portfolio. In 2024, the SBA reported a portfolio of outstanding loans of nearly $459 million. This is less than a third of what borrowers collectively owes federal student loans.
The federal student loan program has been plagued by issues, including the failed development of new applications that delay availability over the past two years.
Aaron Ement, a former education department official who is now president of the National Student Law Defense Network, said the program may benefit from support from the Treasury Department or the SBA, but could move them entirely out of the education department.
“It's obviously decades of why monitoring these programs are housed at agencies,” Ament said.
He also doubted that Trump could move the program himself, except for the explicit acts of Congress.
“If they're trying to do this through some kind of executive action, we'll try it and expect it to be blocked soon,” Emen said.
The student loan program was plagued by many legal battles during President Joseph R. Biden Jr.'s term, after his administration tried to allow billions of debt.
“Previous administrations had experience of challenging and promoting the legal boundaries of student lending authority,” said Matthew M. Chingos, vice president of the Urban Institute, who wrote extensively about student loans. “It led to a lot of court battles and ultimately uncertainty for student borrowers. The current administration may have similar experiences.”
Randy Weingarten, president of the American Federation of Teachers, is suing the education sector to shut down income-based loan repayment plans, but has also expressed doubt that the administration could have an impact on change.
“Firstly, the President has no authority to change the law to do this — only Congress will do it,” she wrote in a social media post. “Secondly, why are they moving well? Student loans aren't small businesses, and RFK JR knows nothing about the ideas,” he says of individuals, the Disabled Education Act and the Special Education Act.
In a social media post, Kennedy wrote that his agency is “ready to assume responsibility for supporting individuals with special needs and overseeing nutrition programs.”
McMahon, who gave full cries of support to Trump's plan to eliminate the department and her work, also struggled in an interview earlier this month to explain the acronym idea.
“Except that it's a program for people with disabilities and needs, I don't know if we can tell you exactly what that means,” she told Fox News.
Supporters of students with disabilities have expressed vigilance over planned changes to Trump.
“Dropping the Department of Education achieves nothing but confusion and confusion,” said Dennis S. Marshall, chief executive of the Parents and Council of Advocates, in a written statement, saying that he has benefited from the unique internal expertise of millions of education sectors. “We send our children to doctors and we don't get an education. We don't agree to send the functions to HHS.”
When Trump pledged to move “special needs and all nutrition programs and everything else” to HHS, he did not detail what “special needs” included. The education department has designated offices for special education, ousting billions of dollars into the state each year to pay for special education services.
The Education Department did not respond to requests for comment.
It is also not entirely clear that the scope of the “nutrition” program is something that HHS inherits. Secretary Kennedy is campaigning to improve nutrition and remove ultra-highly processed foods from school lunches.
However, school lunches are now within the Department of Agriculture and have recently ended a programme that provides minimal processed foods directly to schools from local producers.
Kennedy has issued numerous polarizing statements denounce environmental toxins and the food system broken due to the “explosion” of chronic diseases that have left American children among the most ill people in developed countries.
He has also supported fringe theory about the role that diet can play in preventing diseases such as measles, while questioning the efficacy and safety of proven vaccines.
