The Department of Education was recently slashed. What does that mean for student loans? Experts say it could lead to delays. Especially for borrowers with problems or questions. Here’s what you need to know.
What Happened to the Department of Education?
The Department of Education has been reduced. It now has only half of its staff. The department used to have 4,133 workers. It will now have fewer than 2,000. This change happened after President Trump pushed to close it. The department said it would lay off many employees. Around 600 employees had already resigned or retired.
Despite these cuts, the department will still manage student loans and Pell Grants. But fewer people will be available to help with questions or issues. According to Betsy Mayotte, an expert in student loans, the cuts will affect borrowers with mistakes or problems.
What Does This Mean for Student Loans?
Even though the department is smaller, it will continue its work. This includes managing student loans and grants. However, borrowers might face long waits. If you have an issue with your loan, it may take longer to resolve.
Betsy Mayotte said that most of the people who help with problems were let go. This means it will be harder for some borrowers to get help.
Will the Department of Education Be Closed?
The department won’t be completely shut down yet. It was created by Congress in 1979. The president can’t close it on his own. Congress must agree to eliminate the department. However, Trump has started to cut some parts of the department. Some of these cuts include firing staff and ending contracts.
Why Does Trump Want to Close the Department?
President Trump and his advisers want to reduce the size of the federal government. They believe eliminating the department will help with that goal. They also want to target federal student loans. Some Republicans have criticized programs that help with student debt relief.
People sometimes think the Department of Education controls K-12 schools. This is not true. The department does not make school curriculums. State governments and local schools do. The department’s main job is managing federal education programs, including financial aid.
Can the President Close the Department?
No, the president can’t close the department by himself. Congress has to approve the decision. The president can make suggestions, but Congress has the power to make the final decision. Even if Congress agrees to close the department, it’s not clear what will happen to federal student loans.
Some people believe the Department of Education’s programs should go to another department. The U.S. Treasury Department could take over student loans. The Treasury already handles money, so this might work. But it could take a lot of time to make this change. The Treasury doesn’t have experience with student loan rules. This could create confusion and delays for borrowers.
What Will Happen to Student Loans?
If the department is eliminated, student loans may move to another department. The terms of the loans will stay the same. The interest rates and payment schedules will not change. If your loan is transferred, the process might be slower, but it should be the same.
Student loan expert Mark Kantrowitz says that the terms set in the Master Promissory Note will stay the same. The government must honor the loan agreements.
What About Student Loan Forgiveness?
President Trump has said that he doesn’t support student loan forgiveness. He has called the Biden administration’s student loan relief programs a “catastrophe.” However, the Department of Education is still responsible for managing forgiveness programs. The department has promised to continue the Public Student Loan Forgiveness (PSLF) Program.
Even if the department is eliminated, loans that have already been forgiven won’t be affected. Once a loan is forgiven, it is final. The president can’t take that forgiveness away.
The Biden administration’s plan to offer more forgiveness was recently blocked. The Trump administration is unlikely to support that plan. For now, the PSLF program should still be safe for most people.
What Should You Do if You Have Student Loans?
If you have student loans, you might not notice a big change right away. Most of the work is done through contractors, not full-time employees. So, the impact on your day-to-day life may be small.
However, it’s still important to stay updated. If you’re enrolled in any forgiveness programs or repayment plans, keep track of your progress. Make sure you know who your loan servicer is. Keep your contact information updated so you don’t miss any important updates.
If you are in the PSLF program and close to the 120-payment mark, think about applying for the PSLF buyback program. This program allows you to “buy back” months that didn’t count toward your forgiveness. This could be a good opportunity before the program is potentially discontinued.
Conclusion
The Department of Education has been cut down significantly. While the department still manages student loans, the changes may lead to delays. If the department is shut down entirely, student loans might be moved to another department. However, this won’t affect your loan terms.
It’s important to stay informed. If you have a student loan, make sure your contact information is up to date. If you’re in a forgiveness program, keep track of your progress.
FAQs
What does it mean for student loans if the Department of Education is cut?
Borrowers may face delays in getting help.
Can the president close the Department of Education?
No, Congress must approve it first.
Will my student loan terms change if the department is eliminated?
No, your loan terms will stay the same.
What will happen to student loan forgiveness programs?
The programs should continue, but the future is unclear.
How long will it take to move student loans to another department?
It could take time, and there may be confusion.
What should I do if I have student loans?
Stay informed and keep your contact information updated.
What is the PSLF buyback program?
It lets you buy back months not counted toward forgiveness
Will my student loan be forgiven if US education department is eliminated?
If the U.S. Department of Education is eliminated, existing student loan forgiveness will still be honored. Loans already forgiven cannot be undone, as the forgiveness is legally binding. However, future forgiveness programs may be impacted or changed depending on how the system is reorganized.
