What Happens To Student Loan Forgiveness If Trump Abolishes The Department Of Education?

President-Elect Donald Trump and top Congressional Republicans are calling for the closure of the U.S. Department of Education. Whether they can ultimately succeed is an open question. Even if they do, it doesn’t necessarily mean that federal student loan forgiveness and repayment programs will simply disappear. But borrowers could still see big impacts.

“I say it all the time, I’m dying to get back to do this: We will ultimately eliminate the federal Department of Education,” said Trump in September during a a campaign rally in Wisconsin. Trump also criticized President Joe Biden’s efforts to enact broad student loan forgiveness.

Here’s what student loan borrowers should know about the possible dismantling of the Department of Education.

Eliminating The Department of Education Will Be Tough, And Won’t Automatically End Student Loan Forgiveness

The incoming Trump administration will not be able to simply unilaterally abolish the Department of Education. Congress would have to pass legislation in order to do that, and it’s very unclear at this juncture whether there is enough support for that to happen. Furthermore, eliminating the department would not simply wipe out federal student loans or associated repayment and loan forgiveness programs.

Although Republicans are set to control both the House and the Senate in January, they will have a historically thin margin in the House, with very little room to maneuver. And any legislation in the Senate may require a filibuster-proof margin of 60 votes; even if all Republican senators were in favor of abolishing the department (which is not at all a sure thing), that would still require seven Democratic senators to join them — a tall order. It’s unclear if Republicans would be able to include the elimination of the Department of Education in a planned budget reconciliation bill, which would require only a simply majority to pass the Senate and could include significant changes to federal student loan forgiveness and repayment.

Still, Trump reiterated last week that he still supports trying to dismantle the department, saying he wants a “virtual closure of Department of Education in Washington” in an interview with Time.

“We want to move education back to the states,” he said. “If you look at the states, if you look at some of the individual countries, Norway is a very strong educational country, but many. I think Iowa, and I think Indiana, and a lot of these states that are well-run states. We have a lot of them that are very well run. When they run their own educational program, I think it’s going to, I think they’ll be able to compete with anybody.”

Student Loan Forgiveness And Repayment Programs Would Likely Be Shifted To Other Federal Agencies

Even if the Trump administration and congressional Republicans succeed in abolishing the Department of Education, the federal student loan portfolio — which exceeds $1 trillion — is not going to simply disappear. Even the most conservative members of Congress and the administration will want to see that debt be repaid by borrowers. And someone needs to run the department’s numerous programs including the FAFSA process, as well as federal student loan forgiveness and repayment programs.

While it’s unclear at this juncture what a post-department landscape would look like, Project 2025 — a controversial conservative blueprint for governance next year — suggests that these operations would just be shifted to various different federal departments.

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“To improve educational opportunities for all Americans, the next Administration should work with Congress to pass a Department of Education Reorganization Act to reform, eliminate, or move the department’s programs and offices to appropriate agencies,” says the project manifesto.

“The next Administration should completely reverse the student loan federalization of 2010 and work with Congress to spin off FSA and its student loan obligations to a new government corporation with professional governance and management,” it continues. “With a statutory charge that it preserve the federal student loan portfolio for the benefit of the taxpayers and students, this new entity would be (1) professionally governed by an agency head and board of trustees appointed by the President with the advice and consent of the Senate; (2) funded with annual appropriations from Congress; and (3) operated by professional managers. Federal loans would be assigned directly to the Treasury Department, which would manage collections and defaults. The new federal student loan authority would manage the loan portfolio, handle borrower relations, administer loan applications and disbursements, monitor institutional participation and accountability issues, and issue regulations.”

To be clear, this is a proposal by a conservative think-tank, and not a specific legislative bill. Still, it provides clues as to what “abolishing” the Department of Education would actually mean for federal student loan programs.

Student Loan Forgiveness And Repayment Could Still Be Impacted By Elimination Of Department Of Education

Even if the potential abolition of the Department of Education would be unlikely to cause official changes to federal student loan forgiveness and repayment programs, there still could be indirect impacts.

For example, any wholesale shift in operations could lead to major operational disruptions of federal student loan programs. And if a new federal agency overseeing the system lacks sufficient experience, staffing, or funding to manage hundreds of billions of dollars in student debt and millions of individual accounts, borrowers could bear the brunt of those consequences in the form of slower processing, administrative errors, and less accountability. Some borrower advocacy organizations are already sounding the alarm.

“What happens if the Department of Education is shut down? The truth is, we don’t have a direct answer for you, but we can speculate that student loans will not go away if the Department goes away and it would harm borrowers even more than the current system,” said the Student Debt Crisis Center in a blast email to borrowers last week. The SDCC warned that shutting down the department could lead to federal student loan accounts being moved to “inexperienced agencies” or transferred to for-profit entities, while a broad upheaval could cause “more confusion and delays” as well as a potential “breakdown in how loans are managed, leading to even more chaos for borrowers.”

“While complicated policies, red tape, and lawsuits make their jobs difficult and your student loan situation confusing beyond belief, the folks who work at the Department of Education are not responsible for the student debt crisis,” said the SDCC. “Who is responsible? Politicians, lawmakers, and corporations who have the power to ease the burden and change policies.”