The Department of Education Was Slashed in Half. What Does That Mean for Student Loans?
The Ministry of Education still exists, but about half of yesterday.
Among them President Donald Trump’s call for closure of the agencyThe education department is in statement Tuesday It will account for nearly half of 4,133 workers, including 600 employees who have accepted voluntary resignation or retirement.
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For student loan borrowers, the department will continue to offer student loans and Pell grants. However, every department within the department will also lay off employees.
“We are still looking at what areas are being affected, but as far as I know, this will mainly affect borrowers because it seems that most ‘hersers”””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””” Student Loan Advisor Collegesaid in an email reply.
Education Secretary Linda McMahon has previously said closure of the department would require a Congressional bill, but she released a statement Last week, the upcoming mission was described as the department’s “final mission.”
“The instructions to me are obviously to close the Department of Education and we know we have to work with Congress to make this achievement accomplishment.” McMahon told Fox News Tuesday. She said that if the department is phased out, the administration of federal student loans and Pell grants can be redistributed.
The Department of Education plays a key role in the U.S. education system, but may be known for managing millions of federal financial aid Student Loan Borrower. If you have federal student loans, experts say it may appear if the Department of Education is closed.
Read more: What will happen if the Ministry of Education is abolished? We know
Why does the Trump administration eliminate the Ministry of Education?
The Department of Education was established by Congress in 1979 to track, manage and coordinate education programs and procedures at the federal level. Trump advisers said they wanted to call on Congress to abolish the division, a move that has surfaced among Republicans for years but has not gained widespread support.
“It is not clear why the Republicans are getting rid of the U.S. Department of Education,” student loan experts said. Mark Cantrovitz said in an email. “Why get rid of the powerful tools of implementing the education agenda?”
The Trump administration aims to reduce the size of the federal workforce, so closing the Education Department can be seen as part of that agenda. The ministry also manages federal student loans, Republicans’ goals As former President Joe Biden strongly supports student debt relief.
The role of the department in public education may also be confusing, including the mistaken belief that it controls the K-12 curriculum. The Ministry of Education will not develop courses for any school. Required to be set at the state level, and local school boards create courses to meet these requirements.
For example, Common CoreMany people think this is the “national standard” of education, created by the National Association of Governors and the Chief State School Officials Committee as a multinational effort to standardize educational requirements nationwide. However, the Ministry of Education has not participated in the formulation of these standards.
Can the president close the Ministry of Education?
The president cannot unilaterally eliminate the Department of Education because it was created by the Congress bill and Congress has the right to repeal it. Congress is unlikely to eliminate the department, as Republicans control only 53 votes in the Senate, requiring super joy of 60 votes.
But while the complete shutdown of the Education Department may not be outside the president’s terms of reference, the Trump administration has begun to take action to end specific functions and plans. Billionaire Elon Musk’s team of governors has begun to destroy the department, terminate contracts and fire personnel.
Congress can also cut the department’s budget through budget settlements, which requires only a simple majority. “Proposed to get rid of the plus loan, Student loan interest reduction,,,,, (U.S. Opportunity Tax Credit), (Lifetime Learning Credit)Borrower repayment can be carried out through budget settlement, closed school discharge and all aspects of PSLF. ” Kantrowitz said.
Read more: My monthly student loan payments may jump from $0 to $488. This is how I prepare
What happens if the Ministry of Education is cancelled?
If the Department of Education is completely phased out, many of its programs, including federal student loans, may remain in some form and move to different departments.
“Some people think that given that federal student loans are funded by the Treasury, this responsibility should be with the Treasury.” Elaine RubinEdvisors’ student loan policy expert and communications director said in an email. She added that if the same management system is used to manage the program, “the transition period may be manageable.”
However, any transformation takes time and can ruin millions of borrowers trying to apply for or repay student loans. “The Treasury lacks experience with higher education rules, so there can be some confusion,” Cantrovitz said.
No matter where the student loan ends up, current borrowers should expect the terms they agree to when accepting the loan.
“If a student loan is transferred to another federal agency, the interest rates and terms of the loan will not change. These terms are specified in the total promissory notes and laws,” Cantrovitz said.
What about student loan forgiveness?
President Trump made it clear that he did not support the widespread student loan forgiveness program, calling the Biden administration’s student loan relief efforts “all disasters” during last year’s presidential debate.
However, at the Secretary of Education confirmation hearing, McMahon told the Senator that the Ministry of Education would respect Public Student Loan Forgiveness Program and other student loan forgiveness programs created by Congress.
According to Cantrovitz, the phase-out of the department will also not affect borrowers of loans that have been forgiven. “The president cannot avoid the forgiveness that has been provided. It is legally binding,” he said. The court also said that forgiveness has an “irreversible” effect.
Biden administration Save valuable educational programsLast month, a U.S. Court of Appeals ruled against monthly payments and offered other options for forgiveness. Savings are already on the chopping block and the Trump administration will not defend the plan.
Recently, the Ministry of Education Closed applications for all income-driven repayment programs For the time being, put student loan borrowers in a difficult situation and offer limited options for lower payment plans.
Read more: You cannot be forced to repay a student loan you forgive – unless this happens
What to do if you have a student loan
For most current borrowers, eliminating the impact of the sector may not be obvious. “Most functions are implemented through contractors, so it’s unlikely that student loan borrowers will notice anything different,” Cantrovitz said.
Mayotte agrees that most borrowers don’t see general impact at the moment.
“Getting new loans or receiving benefits on existing loans, including PSLF, should not be affected,” she said. “But it’s still early.”
Currently, borrowers holding student loans should continue to pay attention to updates and prepare for If they pause, please repay. Make sure you know who your loan provider is and that they have your current contact information. If you are joining a savings plan, Expect to pay more this year. You can use Ministry of Education’s loan simulator Calculate your new payment and consider Other options and Save policy.
If you are joining PSLF and are close to a 120 payment trademark, you may want to consider applying PSLF repurchase plan. It allows you to “buy back” unpaid months without accounting for forgiveness when the loan is in a forgiving or deferred situation. While the PSLF program is still safe for many participants, the repo program may disappear, so it’s time to take advantage of it.
