President Trump signed an executive order on Thursday, attempting to close the education sector.
“We're sending education back to the state, where it belongs right,” Education Secretary Linda McMahon said in a statement after Trump signed the order.
But they are not trying to keep the debtor away from the hook. After all, these states are not banks, and the education sector is all big banks except for names. Each year, it lends hundreds of billions of dollars to students and parents, overseeing the collection of around $1.6 trillion in outstanding loans for over 40 million borrowers.
The federal government, who has been in debt, is not going to give up on the money. So, if the education sector is closed, another federal agency will take over the lending system. In the short term, institutions inheriting their loan portfolios must maintain a servicer that collects and tracks payments.
What else might change? Here are some possible answers.
Can the president close the education sector on executive order?
Probably not. As McMahon pointed out at her confirmation hearing, closing federal agencies requires Congressional approval.
“It's a political theatre, not a serious public policy,” said Ted Mitchell, former education secretary who is now president of the American Council of Education, a university membership group.
This could be true or most likely. Unless the White House closes its department without Congressional approval and tries to win a suit that is likely to continue. President Trump signaled Thursday that Congress could be asked to act.
If the shutdown occurs anyway – via a vote in Congress, a court decision, or other means?
Several other federal agencies will need to take over debt issuance and collection. Mr Trump spoke to reporters in early March and said that small business management could be one possibility. Given that many student loan debtors regularly examine their income and the Ministry of Finance has that data, the Ministry of Finance is a separate department.
In either case, education department employees can change departments to maintain institutional memory of how they frequently implement complex loan programs and interpret their terms.
How messy will my loan transfer be?
It's quite troublesome. Debt repayment systems are complex, with highly technical rules and repayment plans, and many student loan servicers track and collect payments. Borrowers should always maintain a record of their loans and all previous payments.
Can I delay payments on my new loan?
That's possible. Perhaps new supervisors are looking to keep the transition neat and schedule handovers to some of the year when many are not receiving new loans.
On March 11, the education sector sent layoff notices to more than 1,000 employees as part of an effort to cut the workforce by half (including those who have already left since Trump took office).
These layoffs are subject to litigation, but other employees with relevant student loan expertise may have already left or left under their own will. It is difficult for borrowers to get quick solutions to many complex problems over the coming period.
“We argue that eliminating half of the department without a clear plan to redistribute workloads will not affect services is naive at best and, at worst, intentionally misleading,” said Beth Maglione, interim president of the National Association of Student Financial Aid Administrators. “It also raises serious concerns about how billions of federal student aid will be paid to students uninterrupted.”
Should I continue to pay my student loan?
yes.
My loan is suspended. What now?
Please read all communications from the loan servicer carefully and follow the instructions in the letter. Check and double check your spam folder frequently to make sure your servicer has the correct paper email address. If your servicer is no longer planning on administering your debt, it should let you know a few months before the switch.
Will I be able to take away my federal loan in the future?
If the education department is closed, another department or entity could become lenders.
Republicans have long-term goals to have private companies handle student loans, and they serve as the federal government as something that will set back their debts.
What about popular programs like income-driven repayments, public service loan exemptions, and Pell grants?
All of these programs exist for the sake of law.
“We certainly should respect these programs,” McMahon said of the forgiveness of public service loans at her confirmation hearing. She also said she committed to maintaining Pell's grants and supported their expansion.
So perhaps some government agencies will continue to oversee each one. However, Congress may attempt to change or end any of them.
What other changes will be made?
Trump issued an executive order to prevent borrowers registered in the Public Service Loan forgiveness program from canceling loans if they work for an organization disliked by his administration.
These include entities supporting terrorism, “engage in violence with the aim of obstructing or affecting federal policies,” child abuse “including child chemistry or surgical castration or amputation,” employers “engage in patterns that support illegal discrimination and cause only behaviour,” and “violating state torts, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons with disabilities, persons
This cleaning is certainly going to cause a lawsuit. It is not clear how quickly the education department will try to set it up.
Embedded at the Department of Education's headquarters shortly after Trump's inauguration, Elon Musk's allies also discussed using software-enabled chatbots to replace workers who help answer questions from parents and borrowers.
