Why is this important?

If the US Department of Education gets shut down, significant concerns may come up regarding the future of federal student aid loans. The Department of Education currently oversees loans from the government, totaling about 1.6 trillion dollars worth of student loans. Getting rid of the Department of Education could result in substantial disruptions in the administration and servicing of student loans, taking effect on millions of borrowers nationwide.

Who will manage loans?

All the responsibilities of the ED would need to be reassigned to other federal bodies, such as the Department of the Treasury or the Department of Justice. This would lead to administrative challenges because many new systems and protocols would need to be established. Meaning many adverse effects for loan borrowers.

What effect will this have on those with loans?

Students will face several difficulties. For those who have loans, a disruption in loan servicing would cause delays in payment processing and limited access to customer support. It's also likely that the changes in administration may interfere with income-dependent plans and loan forgiveness programs.

In addition, the resources for getting a loan would likely be much harder to find for those who need it, causing confusion and creating challenges for students to navigate their acquisition of financial aid. 

Should you really be worried?

This is all dependent on the fact that Congress would need to approve President Trump's motion to shut down the Department of Education. During his first term, Trump also made notions of potentially shutting down the Department of Education, but they were not realized because Congress would not allow such a thing to go through.

However, things have changed. In his second term, Congress leans much more towards him, and there is a substantial concern that if he proposes this, it will pass through Congress.

What's next?

The possible elimination of the Department of Education presents significant uncertainties for the administration of federal student loans. While the redistribution of responsibility to other agencies is likely, the transition of those responsibilities may lead to challenges that affect both challenges that may impact both loan servicing and borrowers.

Current students and those who plan to study should stay informed on developments in this matter and seek guidance from official sources to effectively manage their federal student loans during this period of potential change.