(Bloomberg) — President Donald Trump said that some key functions of the Education Department, which he is moving to dramatically shrink, would be handled by the Small Business Administration and Department of Health and Human Services.
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The move comes amid worries that his efforts to overhaul the federal government could reduce programs and services.
Trump said that the Education Department’s $1.6 trillion student-loan portfolio would now be handled by the SBA, while HHS will take responsibility for programs that benefit students with disabilities. The SBA is headed by Kelly Loeffler, while the federal health department is run by Robert F. Kennedy Jr.
“We have a portfolio that’s very large, lots of loans, tens of thousands of loans, pretty complicated deal,” Trump said Friday of the government’s role. “That’s coming out of the Department of Education immediately.”
Health and Human Services will be “handling special needs and all of the nutrition programs,” Trump added, saying the change would “work out very well.” It wasn’t immediately clear what food programs he was referencing. The Department of Agriculture administers several federal school nutrition programs.
Education Secretary Linda McMahon, in an interview on Fox News, said she had already spoken to Loeffler about the matter.
“We’re going to work on a strategic plan together,” McMahon said. “We’ve talked also with Treasury and how can they be interactive in that process.”
The Treasury Department did not immediately respond to a request for comment. The Education Department referred a reporter to McMahon’s Fox News interview.
Trump’s remarks come one day after he signed an order directing McMahon to take steps to largely dismantle the cabinet-level department she runs, an unprecedented effort to eliminate an agency with sweeping responsibilities that involve billions in funds and affect millions of American students.
The move risks roiling millions of parents and students at all levels of American education who rely on the department’s current services and funding and has amplified concerns about Trump’s effort to reshape the federal government, including what programs would be preserved and how other duties would be reassigned.
Congressional approval is needed to formally close down the Education Department, a requirement Trump has acknowledged. The president and his allies have said that the agency would be massively reduced in size and scope and that key functions could be better handled by other parts of the government.
During the ceremony, Trump said some functions, such as Pell Grants and funding resources for children with disabilities or special needs would be “preserved in full and redistributed to various other agencies and departments that will take very good care of them.” He gave few specifics.
Student Loans
The Education Department has three core responsibilities: administering federal financial assistance to subsidize educational costs; collecting and disseminating data; and investigating civil rights violations at academic institutions across the country.
How Trump will address the department’s responsibilities involving federal student loans has been a particular flashpoint. The department oversees federal loans held by roughly 43 million Americans — or about one in six US adults. Student borrowers have expressed anxiety about the impact on loan collection or forgiveness programs. The department also administers the application used by prospective higher education students to determine their eligibility for funding.
Earlier: ‘Freaking the Hell Out:’ Education Overhaul Rattles Borrowers
Cuts at the Education Department are already well underway with the agency moving to slash nearly half of its workforce, which once numbered over 4,100 personnel.
At least 325 employees in the Federal Student Aid Office, and more than 200 personnel in the Office of Civil Rights were fired in a recent reduction in workforce that affected 1,300 people, according to a department-compiled spreadsheet seen by Bloomberg News. Management within the federal student aid division has been telling staffers internally that they will do “less with less,” according to people familiar with the messaging.
In a recent email seen by Bloomberg News, a department official explained that critical teams that normally resolve issues reported by student-loan borrowers were no longer available to assist them or had lost access to certain systems.
Scott Buchanan, the executive director of the Student Loan Servicing Alliance, said student-loan servicers — the third-party contractors that handle most day-to-day functions of the system — should be able to continue to operate as normal regardless of the agency that oversees the portfolio.
Buchanan, whose association represents every federal student loan servicer, cautioned that there could be a learning curve if current Education Department staffers who regularly interface with servicers depart.
Earlier: Small Business Administration to Cut 43% of Workers in DOGE Push
Some observers say the SBA’s experience running loan programs makes it a suitable home for tasks. The SBA currently administers a disaster loan program for businesses and homeowners.
Adam Kissel, a visiting fellow at the Heritage Foundation and a former Trump Education Department official, says SBA loans “are in the same general ballpark as student loans,” in terms of size. He believes a 1960s law, known as General Education Provisions Act, gives the agency the authority to hand off duties to other agencies.
Earlier Friday, the SBA announced that it, too, was reducing its workforce, with plans to eliminate 43% of employees.
(Updates with McMahon remarks in paragraphs 6-8.)
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