The Administration’s Plan To Transition Federal Student Loans to Treasury Continues To Be Questioned By Lawmakers on Both Sides of the Aisle

** Overview
Throughout his Presidential campaign former President Trump made it clear that if he returned to the White House he would eliminate the U.S. Department of Education (Department). Upon winning a second term, in March of 2025 President Trump issued an Executive Order requiring the Secretary of Education to—

“to the maximum extent appropriate and permitted by law, take all necessary steps to facilitate the closure of the Department of Education and return authority over education to the States and local communities while ensuring the effective and uninterrupted delivery of services, programs, and benefits on which Americans rely.”

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** Following the EO, Secretary of Education McMahon has taken multiple steps to fulfill the President’s directive.
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* Between March and October 2025, the agencies workforce was reduced by nearly 50% with 200) of the 4,100 agency employees departing through reductions in force and voluntary departures.
* In July 2025, the Department announced the first partnership between the Department of Education and the Department of Labor designed to create an integrated federal education and workforce system, aiming to streamline programs, reduce duplicative efforts, and provide states with better resources. This initial partnership was described by Secretary of Education McMahon as a “proof of concept” which would be used to advance further interagency partnerships in the future.
* In November 2025, six new partnerships with four additional federal agencies were announced. The Administration stated that these actions were intended to break up the federal education bureaucracy, ensure efficient delivery of funded programs, activities, and move closer to fulfilling the President’s promise to return education to the states.
* On March 12^th of this year, the Administration announced the Federal Student Assistance Partnership to enhance the administration of Federal student aid programs, mitigate the continuing fallout and cost to taxpayers from the Biden Administration’s mismanagement of the Federal student loan portfolio, and facilitate the return of defaulted borrowers to repayment.
* On March 26^th, in a joint statement by the heads of the Department of Education, the Department of Energy, and the General Services Administration that beginning in the summer the Department of Education would be turning over the building where it is headquartered to the Department of Energy and moving to a much smaller building.

Each of these actions has sparked reactions from Capitol Hill on both sides of the isle. The overarching sentiment has been, and remains, that only Congress has the authority to eliminate the U.S. Department of Education established by law under the Department of Education Organization Act (P.L. 96-98). The Administration acknowledges the statute, but continues to systematically take actions which many suggest/assert our circumventing or usurping the statute.

In response Congress is asking a lot of questions…

A Focus On the Federal Student Assistance Partnership
Since March, and honestly long before then, various Congressional Committees have expressed concerns with the Administration’s actions. The House and Senate Budget Committee, the House and Seante Appropriations Committee, and the House and Senate Education Committees have each posed questions and offered various statements during hearings, markups and in press releases regarding the broader actions, and have most recently zeroed in on the major actions regarding the Title IV – Federal Student Loan programs.

To give you a sense of the focused attention on this issues. Here is a summary of the actions taken by Senate Democrats, led by Senator Elizabeth Warren. Her press release from yesterday noted,

“Senator Warren has led the fight to make our higher education system more affordable, cancel student loan debt, and hold student loan servicers accountable for incompetence and malfeasance. She launched the Save Our Schools (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=b8fd3e5ccf&e=05bce952ad) campaign in a coordinated effort to fight back against President Trump’s attempts to abolish the Department of Education.
* On April 28, 2026, Senators Warren (D-Mass.) and Bernie Sanders (I-Vt.) pressed the Consumer Financial Protection Bureau’s new Student Loan Ombudsman (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=6c88220d5f&e=05bce952ad) , Geoffrey Gradler, on his plan to protect student loan borrowers, especially given his past censorship of a key student loan report at the CFPB and his background as a lobbyist for lenders. The senators also asked him to recuse himself from past clients’ matters that might come before his office at the CFPB.
* On April 2, 2026, Senators Warren, Sanders, Wyden, Murray, and Baldwin—all top Democrats on influential education committees—pressed Secretary of Education Linda McMahon (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=a3f7eb297c&e=05bce952ad) and Secretary of the Treasury Scott Bessent to rescind their plans to move the administration of federal student loans to the Treasury Department, the latest move in the Trump administration’s attempts to dismantle the Department of Education.
* On February 23, 2026, Senators Elizabeth Warren and Bernie Sanders, along with Representative Ayanna Pressley, released a response (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=a8af6aacae&e=05bce952ad) from the Department of Education to their November letter regarding a potential sale of the federal student debt portfolio. In the response, ED confirms for the first time publicly that they are weighing a sale of the federal student loan portfolio.
* On February 19, 2026, Senators Elizabeth Warren (D-Mass.) and Jeff Merkley (D-Ore.) pushed (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=5b7d36e633&e=05bce952ad) Education Secretary Linda McMahon on concerns that the U.S. Department of Education is apparently obstructing Congressional efforts to hold federal student loan servicers accountable for underperformance.
* On February 2, 2026, Senator Warren released a new report (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=9f44def5ac&e=05bce952ad) revealing the findings of their investigation into how private student loan lenders will reap the benefits from cuts to federal student loan access enacted in Republicans’ Big, Beautiful Bill (OBBBA). The report is the first Congressional analysis of the impacts of the OBBBA’s student loan restrictions on the private lending market.
* On January 22, 2026, Senators Elizabeth Warren, Jeff Merkley (D-Ore.), Sheldon Whitehouse (D-R.I.), and Tim Kaine (D-Va.) led their Senate colleagues in demanding answers (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=014ab4a191&e=05bce952ad) from Trump Education Secretary Linda McMahon about the Trump Administration’s proposal to eliminate affordable student loan repayment options for millions of Americans.
* On December 8, 2025, Senator Warren led her colleagues in writing to the federal student loan servicers (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=fd0e9253e1&e=05bce952ad) to ensure they are providing borrowers with the customer service they deserve in the wake of the Trump administration’s student loan policy whiplash. The senators sent letters to MOHELA, Nelnet, EdFinancial, Maximus, and CRI.
* On December 1, 2025, Senator Warren published an op-ed (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=164dbd207d&e=05bce952ad) in USA Today (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=279327c12c&e=05bce952ad) calling for Secretary of Education Linda McMahon to resign following the recent news that President Trump and Secretary McMahon plan to further dismantle the Department of Education (ED).
* On November 17, 2025, Senator Warren led over 40 of her colleagues in a letter (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=e199c871ec&e=05bce952ad) urging Secretary of Education Linda McMahon and Secretary of the Treasury Scott Bessent to immediately end any plans to sell or transfer the federal student loan portfolio to the private market.
* On November 10, 2025, Senator Warren led her colleagues in a letter urging (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=b3a0156df2&e=05bce952ad) the Trump administration to use the IRS’s existing legal authorities to stop the looming “tax bomb” facing borrowers who obtain income-driven repayment (IDR) discharges of their student loan debt.
* On October 15, 2025, Senator Warren and Representative Ayanna Pressley (D-Mass.) led 70 members of Congress (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=0ebdcb348e&e=05bce952ad) in a letter calling on the Trump administration to address the ongoing and unprecedented wave of student loan delinquencies and defaults, which threatens the financial stability of millions of people and could have disastrous effects on the American economy.
* On September 19, 2025, following a push by Senator Warren and nine other senators, the Acting Inspector General of the U.S. Department of Education agreed to open an investigation (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=121f4daa19&e=05bce952ad) into DOGE’s infiltration of internal systems, including the scope of its access to sensitive student loan borrower information and its impact on borrowers’ rights and privacy.
* On August 26, 2025, Senator Warren led colleagues (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=d4f6f4ac5d&e=05bce952ad) in sending a follow-up letter to Education Secretary Linda McMahon condemning the Department of Education for deliberately hiding the “Submit a Complaint” button on the Office of Federal Student Aid’s website, firing employees responsible for providing customer service to borrowers and families and misleading Congress about the scope of these firings.
* On August 4, 2025, Senator Warren led (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=cf67897fc2&e=05bce952ad) eight Senators in pressing major private student loan lenders on their plans to serve the incoming surge of borrowers who will be pushed to the industry because of Republicans’ recently passed “Big, Beautiful Bill.”
* On July 17, 2025, Senator Warren released a new 23-page report (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=914ac7afbb&e=05bce952ad) , “Education At Risk: Frontline Impacts of Trump’s War on Students,” highlighting warnings from 11 major national education and civil rights organizations on the impact of the Trump Administration’s dismantling of the Department of Education (ED), slashing support to millions of American students, primary and secondary school teachers, administrators, parents, and student loan borrowers.
* On July 15, 2025, Senators Warren and Sanders, along with Senate Democratic Leader Chuck Schumer, sent a letter (centralstatesedu.us11.list-manage.com/track/click?u=75e01bde202d593ed21c1c91c&id=c5bf329f3f&e=05bce952ad) to Secretary of Education Linda McMahon, urging her to reverse the interest hike on student loan borrowers in the SAVE forbearance.”

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What’s Next
In addition to updates on all of the key regulatory negotiations, CSPEN will share more details on this important issue – including summary of the Administration’s agenda and plan, the challenges that are already being discussed openly with phase one of the plan address student loans in default, and the reactions and actions being taken by various groups.