The Small Business Administration will take over federal student loan programs, President Donald Trump announced Friday.
“We have a portfolio that’s very large, lots of loans. Tens of thousands of loans. Pretty complicated deal,” Trump said in the Oval Office. “That’s coming out of the Department of Education immediately, and it’s going to be headed up by Kelly Loeffler at SBA.”
Loeffler, a former GOP senator from Georgia, was confirmed last month as head of SBA and will now oversee a loans program that doles out trillions of dollars to college students.
The news follows Thursday’s signing of an executive order designed to unwind the Department of Education, which would take an act of Congress to be fully implemented. Trump may be trying to lay the groundwork for such a move by establishing a federal government that runs without it.
“They’ll be serviced much better than they have in the past,” Trump said. “It’s been a mess.”
More than 40 million Americans hold over $1.6 trillion in student loans collectively, which prompted former President Joe Biden to try to shift some of those debts onto taxpayers. Trump has shelved Biden’s forgiveness plans but may expect the program to become more streamlined under the business-focused SBA.
However, the news comes on the same day that the SBA announced a reorganization that will see its staff cut by 43%, which the Trump administration says will reduce its workforce to pre-pandemic levels.
Trump also announced that the Department of Health and Human Services will take over programs for children with special needs, another function previously handled by the Department of Education.
Both of those moves are certain to face legal challenges.
“I think that will work out very well, and those two elements will be taken out of the Department of Education,” he said. “I guarantee that in a few years from now — I hope I’m going to be around to see it — but I think we’re going to see a lot of it. I think that you’re going to have tremendous results.”
Conservatives have pledged to dismantle the Education Department for decades, a vision Trump appears to be pursuing in his second term.
Most Republicans are celebrating the news, saying the department’s functions can be handled by other agencies, but Democrats and teachers unions have decried the moves as damaging to schoolchildren.
Earlier on Friday, American Federation of Teachers President Randi Weingarten claimed Trump was eliminating the department to fund tax cuts for the rich.
“What does it mean if Title One [funding] goes to pay for tax cuts for Elon Musk?” Weingarten said on a Zoom call.
Weingarten said the moves could “take away a reading specialist” or an after-school program “to give Elon Musk a tax cut.”
Trump’s education executive order faces congressional and legal hurdles
However, advocates of eliminating the department say that’s a mischaracterization and that slashing jobs in Washington would leave more money available for student services rather than less.
“This will empower the states and make sure that students receive maximum benefits from the available funds,” said Erika Donalds, a conservative education activist and wife of Rep. Byron Donalds (R-FL).