A federal judge temporarily blocked President Donald Trump's attempt to reassign more than $1.6 trillion in federal student debt from the Department of Education to the Small Business Administration (SBA) on Thursday.
What Happened: Judge Myong J. Joun of the U.S. District Court for the District of Massachusetts issued a preliminary injunction directing the Trump administration to reinstate more than 1,300 employees at the Department of Education and halting any immediate transfer of student loan management operations, according to CNBC.
"They're all set for it," Trump had said earlier about SBA's preparedness. The administration, in turn, has asked for the ruling to be suspended while it files an appeal.
Why It Matters: Critics like Sarah Sattelmeyer of New America told CNBC that "instead of increasing efficiency, the movement of the Department's core functions would have increased confusion and decreased the effectiveness of programs that students depend on to access education."
Mark Kantrowitz, a higher education expert, highlighted that the SBA does not have relevant infrastructure or experience. Moreover, the transfer would necessitate congressional action, as current law delegates federal student debt oversight to the Department of Education.
The issue is further complicated by Trump's March announcement that the SBA would face massive staffing cuts, losing almost half its workforce.
After a five-year pause, the federal government resumed collections on defaulted loans this month, with the Education Department sharing that “42.7 million borrowers owe more than $1.6 trillion in student debt."
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