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NYTimes
New York Times
20 Mar 2025
Ron Lieber


NextImg:What Happens to Student Loans if the Education Dept. Closes?

President Trump signed an executive order on Thursday in an attempt to shut down the Education Department.

“We are sending education back to the states, where it so rightly belongs,” Secretary of Education Linda McMahon said in a statement after Mr. Trump signed the order.

But they are not about to let debtors off the hook. Those states, after all, are not banks, and the Education Department is a big bank in all but name. It lends tens of billions of dollars to students and parents each year and oversees the collection of roughly $1.6 trillion in outstanding loans for over 40 million borrowers.

The debt-ridden federal government isn’t going to give up that money. So if the Education Department closed, another federal entity would take the loan system over. In the short term, any agency inheriting the loan portfolio would need to keep the servicers that collect and track payments.

What else might change? Here are some possible answers.

Can the president shut down the Education Department with an executive order?

Probably not. Congressional approval is needed to shut down a federal agency, as Ms. McMahon noted in her confirmation hearing.

“This is political theater, not serious public policy,” said Ted Mitchell, a former undersecretary of education who is now the president of the American Council on Education, a university membership group.


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