Trump Orders Steps To Dismantle Department Of Education: What It Means For Student Loans

President Donald Trump signed an executive order on Thursday aimed at dismantling the U.S. Department of Education. The president also announced on Friday that federal student loan servicing will be transferred to the Small Business Administration. Here's a look at the latest developments.

The Details: Trump's order instructed Education Secretary Linda McMahon to “take all necessary measures to facilitate the dissolution of the Department of Education and return educational authority to the states.”

The White House also acknowledged that it cannot completely dissolve the Department of Education without Congressional approval. It has, however, already reduced the department’s workforce from 4,133 to 2,183 employees since the beginning of Trump's second term.

President Trump then announced separately on Friday that the Small Business Administration will handle student loans.

“They are all set for it, they are waiting for it. It’ll be serviced much better than it has in the past,” Trump told reporters.

The Small Business Administration almost simultaneously announced in a press release that it will reduce its staff by eliminating approximately 2,700 positions out of a total workforce of nearly 6,500 "through voluntary resignations, the expiration of COVID-era and other term appointments, and a limited number of reductions in force."

It is unclear when and how the SBA will assume the load of federal student loan debt, which totaled $1.777 trillion held by 42.7 million borrowers in 2024, according to the Education Data Initiative.

Stocks To Watch: Student loan providers, including Navient Corp. NAVI and SLM Corp. SLM, should be monitored as the situation develops.

SoFi Technologies, Inc. SOFI, which provides student loan refinancing services, should also be watched for possible effects from the Trump administration's changes.

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