One question we’ve been asked over and over again in the last few weeks is: “If the Department of Education (DoE) shuts down, will I still need to pay my student loans?”
The short answer? Yes, you will still need to make your student loan payments.
For a more in-depth explanation, keep reading.
Who Owns Student Loans?
The Department of Education manages federal student aid and oversees a financial portfolio of over $1.7 trillion in student loans. However, while the DoE oversees loan programs, it has passed off payment collection activities to loan servicers.
Even if the DoE were to shut down, the federal government still owns the debt. That means student loan payments would still be required. The only potential change might be a temporary forbearance during a transition period, but that isn’t guaranteed.
Will the Department of Education Shut Down?
Conservatives have aimed their sites at the Department of Education since it was created in 1979 by President Jimmy Carter and Congress. The situation escalated over the last two years when the Biden administration attempted widespread loan forgiveness, raising conservative alarms. Fully dismantling the department would require a majority vote in Congress, but that hasn’t stopped the Trump administration from taking steps to weaken the agency. From laying off dozens of employees to stripping many of its contracts related to research and teacher quality, the process of minimizing the DoE’s reach has already begun.
What Happens If the Department of Education Is Disbanded?
To grasp the significance of what would happen without the Department of Education, it’s important to understand what exactly the DoE does and what options would be available.
What Does the Department of Education Do?
The Department of Education is responsible for more than just receiving your student loan payments. As part of managing Federal Student Aid’s $1.6 trillion student loan portfolio, the DoE:
- Distributes federal student aid to borrowers who submitted the FAFSA,
- Dolls out grant, work-study, and loan funds,
- Manages student loan servicers,
- Oversees the National Assessment of Educational Progress, the nation’s report card,
- Sends money to U.S. public schools, primarily through Title I and the Individuals with Disabilities Education Act (IDEA).
Who Would Take Over if the Department of Education is Abolished?
If the DoE were abolished, the responsibility for student loan oversight would simply shift to another government agency. It has been theorized that the Department’s Office for Civil Rights could be placed with the Justice Department and the student loan portfolio in the Treasury Department. Student loan forgiveness programs, loan consolidation options, and repayment plans could see structural changes, but the debt itself wouldn’t disappear.
It’s also important to remember that dissolving the DoE would require Congressional approval, making it a complex and lengthy process.
What Should Borrowers Do?
While no immediate changes are happening, staying informed is crucial. Here’s how you can stay prepared:
- Stay informed and listen for updates on student loan forgiveness, repayment, and consolidation options.
- Keep your servicer and FSA login credentials up to date to avoid missing important information.
- Maintain accurate records of your loan payments and forgiveness applications.
Have Questions? We Can Help!
If you have any concerns about your student loans, forgiveness programs, loan consolidation, or your account, call us today. We’re here to help you navigate your repayment journey with confidence.
Staying informed and proactive is the best way to manage your student loans, no matter what happens with the DoE. Keep an eye on updates, and rest assured that repayment will continue—just possibly under a different agency in the future.
Need expert guidance? At Docupop, we specialize in helping borrowers navigate the complexities of student loan repayment—so you don’t have to do it alone. Contact us today to get personalized support and ensure you’re on the right path to managing your student debt.
Don’t wait—take control of your student loans now!
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