Treasury Takes Over Student Loans: What It Means

0:00In Anchorage, it's March 20th, and here's what is going on. The U.S. Treasury Department is stepping in to handle collections on defaulted federal student loans, taking that job from the Department of Education. This marks the first phase of a bigger plan where Treasury could eventually manage the entire $1.7 trillion federal student loan. Portfolio. Right now, fewer than 40 percent of borrowers are making payments, and nearly a quarter are in default. This move builds on efforts to shrink the education department, which has already signed nine other deals shifting duties to agencies like Labor and Health and Human Services. Treasury will also offer operational help to give more borrowers back into repayment during this initial stage. Officials promised those already paying will notice no changes and might even get better customer service. Critics are pushing back hard. Senate Democrats call it reckless, saying it hurts borrowers who need support amid rising costs. Union leaders for education workers say it's an insult to the 43 million Americans with

1:03these loans, especially after massive layoffs gutted. Oversight teams. Advocacy groups warn it could push vulnerable families deeper into debt. Recent Supreme Court approval has allowed big staff cuts at the department, hitting student aid programs the hardest. A government report flagged that law staff means less monitoring of loan servicers, some of whom have broken rules repeatedly. As these shifts unfold, the focus stays on streamlining operations while states take more control over education, leaving borrowers watching closely for any real improvements in service.