Student Loan Update as Trump Set to Order Department of Education Shutdown

President Donald Trump is set to sign an executive order on Thursday directing the shutdown of the U.S. Education Department, fulfilling a campaign pledge to eliminate the agency, which has long been a conservative target.

Federal student loan payments, federal funding for students with disabilities under the Individuals with Disabilities Education Act (IDEA) and Title I funding for low-income schools will remain unchanged under the order, according to reports.

However, Education Secretary Linda McMahon is developing a plan to "bring these funds closer to states, localities, and more importantly, students," a White House official told USA Today.

"The Department of Education will be much smaller than it is today. As you know, the president's executive order directed Linda McMahon to greatly minimize the agency. So, when it comes to student loans and Pell Grants, those will still be run out of the Department of Education," White House press secretary Karoline Leavitt told reporters on Thursday.

Newsweek has emailed the Department of Education on Wednesday night for comment.

Why It Matters

Roughly 43 million Americans have some sort of student loan debt. The Education Department reports Americans collectively have $1.5 trillion in student debt nationwide.

In recent weeks, Trump has made efforts to dismantle the department, adding that student loan programs could be moved to different agencies if the department is eliminated. Roughly half of all Education Department workers are being laid off as the agency undergoes major restructuring.

What to Know

President Donald Trump has criticized the Department of Education as wasteful and influenced by liberal ideology. However, fully dismantling the agency would require an act of Congress, which established the department in 1979.

A White House fact sheet states that Trump's executive order will instruct McMahon to "take all necessary steps" to shut down the department and return education authority to the states, while ensuring that critical programs and benefits remain uninterrupted.

The Department of Education distributes billions of dollars annually to schools and manages a $1.6 trillion federal student loan portfolio.

Much of the agency's work involves financial oversight, including student loans and various aid programs for colleges and school districts, covering everything from school meals to support for homeless students. It also plays a key role in civil rights enforcement within education.

While federal funding accounts for only about 14 percent of public school budgets, it is crucial for supplemental programs aiding vulnerable students, such as Title I funding for low-income schools and the McKinney-Vento program for homeless students.

Colleges and universities, however, are more dependent on federal money, relying on research grants and student financial aid that helps cover tuition costs.

Recently, some student loan borrowers are seeing their payments skyrocket amid changes to the Education Department.

Trump has updated the department's income-driven federal student loan repayment programs, causing some borrowers to see their monthly payments rise to anywhere from $500 to $5,000.

Earlier this month, Trump said that the Education Department's student loan portfolio would be moved if the department is ever fully eliminated by Congress.

What People Are Saying

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "What we're currently seeing is the worst-case scenario for student loan borrowers. Not only are the plans introduced in recent years that provided additional student loan repayment and forgiveness options going away, but much of the staff that oversaw these programs and were able to provide assistance to these borrowers have been let go. The result is payments without support of repayment or forgiveness plans are going up, customer service is virtually non-existent, and borrowers feel left out in the cold as these sweeping changes upend their financial lives. It's challenging on all ends."

Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "Many payments now don't even cover accruing interest, creating negative amortization where loan balances grow despite regular payments. A particularly troubling aspect is that high-balance borrowers with moderate incomes could end up in perpetual debt if forgiveness timelines are eliminated as proposed in the College Cost Reduction Act."

What Happens Next

The Trump administration has already begun reducing the agency's scope through layoffs and program cuts. The department is working to cut its workforce in half and downsize key offices, including the Office for Civil Rights and the Institute of Education Sciences, which monitors academic progress nationwide.

Reporting by the Associated Press contributed to this story.

Update: 3/19/25, 7:35 p.m. ET: This article has been updated with additional information.

Update: 3/20/25, 5:18 p.m. ET: This article has been updated with additional remarks.