President Trump announced Friday that the Education Department would no longer manage the nation’s $1.6 trillion student loan portfolio or supervise “special needs” programs in a major shake-up of an agency he has sought to eliminate.
Student loans will move under the Small Business Administration, while special education services, along with nutrition programs, will move under the Department of Health and Human Services, Mr. Trump said.
Mr. Trump told reporters gathered in the Oval Office that the moves would take place “immediately,” adding that he believed the restructuring — which critics swiftly vowed to challenge in court — would “work out very well.”
“They’ll be serviced much better than it has in the past. It’s been a mess,” he said of the loans. He added, “You’re going to have great education, much better than it is now, at half the cost.”
Mr. Trump laid the groundwork for his announcement on Thursday, with an executive order aimed at closing the Education Department. The department cannot be closed without the approval of Congress, which created it. But since Mr. Trump took office, his administration has slashed the department’s work force by more than half and eliminated $600 million in grants.
Reassigning such primary functions would further hollow out the agency, though education experts and union officials questioned Mr. Trump’s authority to do so unilaterally, particularly in the case of student loans. Many suggested that the result would not be better service — only more confusion for borrowers.
Karoline Leavitt, the White House press secretary, insisted on Thursday that major programs like student loans would still be run out of the Education Department, albeit a much leaner one. Pressed Friday to clarify what functions would be moved, and what legal authority Mr. Trump had to transfer them, she invoked Congress.
“President Trump is doing everything within his executive authority to dismantle the Department of Education and return education back to the states while safeguarding critical functions for students and families such as student loans, special needs programs and nutrition programs,” she said. “The president has always said Congress has a role to play in this effort, and we expect them to help the president deliver.”
Beth Maglione, the interim president and chief executive of the National Association of Student Financial Aid Administrators, said it was “unclear” whether Mr. Trump could move aid programs away from the department. She suggested that a transition, even one authorized by Congress, would require time and careful planning.
“The administration would first need to articulate a definitive strategy outlining how the work of administering student aid programs would be allocated within the S.B.A., determine the necessary staffing and resources and build the requisite infrastructure to facilitate the transition of these programs to another federal agency,” she said. “In the absence of any comprehensive plan, a serious concern remains: How will this restructuring be executed without disruption to students and institutions?”
In the executive order, the president compared the size of the federal student loan portfolio with that of Wells Fargo, the bank — noting that Wells Fargo had over 200,000 employees, while only 1,500 people worked in the Education Department’s Office of Federal Student Aid.
“The Department of Education is not a bank, and it must return bank functions to an entity equipped to serve America’s students,” the order stated.
On Thursday, Mr. Trump pledged that the legally mandated funding for students who attend high-poverty schools and who rely on federal Pell grants, as well as “resources for children with special disabilities and special needs,” would be preserved even as the department was gutted in accordance with his plans.
He indicated that this was important to Linda McMahon, Mr. Trump’s education secretary, who served as S.B.A. administrator during his first term.
The restructuring Mr. Trump announced on Friday would transfer some of the largest programs handled by the Education Department into agencies that have had minimal involvement with schools and are going through staffing reductions themselves.
The S.B.A., headed by Kelly Loeffler, announced Thursday that it would cut 43 percent of its roughly 6,500 workers, while H.H.S., led by Robert F. Kennedy Jr., has offered buyouts to most of its roughly 80,000 employees.
Representatives for the S.B.A. did not immediately respond to a request for comment. In a social media post, Ms. Loeffler said, “The SBA stands ready to take the lead on restoring accountability and integrity to America’s student loan portfolio.”
The acquisition of student loans would vastly expand the size of the portfolio the S.B.A. manages every year. In the 2024 fiscal year, the S.B.A. reported a portfolio of nearly $459 billion in outstanding loans. That is less than a third of what borrowers collectively owe in federal student loans.
The federal student loan program has been plagued with problems, including a botched rollout of a new application form that delayed its availability for the past two years.
Aaron Ament, a former Education Department official who is now the president of the National Student Legal Defense Network, said that while the programs might benefit from support from the Treasury Department or the S.B.A., moving them out of the Education Department entirely could lead to even more chaos for students, colleges and American taxpayers.
“There’s obviously decades of thinking that’s gone into why the oversight of these programs is housed at the agency,” Mr. Ament said.
He also doubted that Mr. Trump could transfer the programs himself, barring an explicit act of Congress.
“If they’re trying to do this through some sort of executive action, we will challenge it, and I’d expect it to be quickly blocked,” Mr. Ament said.
The student loan program was mired in legal battles for much of President Joseph R. Biden Jr.’s term after his administration sought to forgive billions in debt.
“The prior administration had the experience of doing things that challenged and pushed the legal boundaries of their authority around student lending,” said Matthew M. Chingos, a vice president at the Urban Institute who has written extensively about student loans. “That led to a lot of court battles and ultimately uncertainty for student borrowers. The current administration may have a similar experience.”
Randi Weingarten, the president of the American Federation of Teachers, which is suing the Education Department for shutting down income-based loan repayment plans, also expressed doubts that the administration could effect the changes.
“First, a President doesn’t have the authority to change law- to do this- only Congress does,” she wrote in a social media post. “And second, why are either move a good idea? Student loans are not a small business & RFK Jr knows nothing about the IDEA,” referring to the Individuals with Disabilities Education Act, a bedrock special education law.
In a social media post, Mr. Kennedy wrote that his agency was “fully prepared to take on the responsibility of supporting individuals with special needs and overseeing nutrition programs,” that were run by the Education Department, and would “make the care of our most vulnerable citizens our highest national priority.”
Ms. McMahon, who has given full-throated support for Mr. Trump’s plan to eliminate the department and her job, also struggled in an interview earlier this month to explain the acronym IDEA.
“I’m not sure I can tell you exactly what it stands for, except that it’s the programs for disabled and needs,” she told Fox News.
Advocates for students with disabilities expressed alarm at Mr. Trump’s planned changes.
“Throwing out the Department of Education accomplishes nothing but chaos and confusion,” Denise S. Marshall, the chief executive of the Council of Parent Attorneys and Advocates, said in a written statement, noting that millions benefited from the unique in-house expertise of the Education Department. “We would not send our children to the doctors to be educated, and we will not agree to send functions to H.H.S.”
When Mr. Trump promised to transfer “special needs and all of the nutrition programs and everything else” to H.H.S., he did not detail what “special needs” included. The Education Department doles out billions annually to states to pay for special education services, and has a designated Office of Special Education.
The Education Department did not respond to a request for comment.
It is also not entirely clear what the scope of the “nutrition” programs are that H.H.S. would inherit. Mr. Kennedy, its secretary, has campaigned for improving nutrition and removing ultra-processed food from school lunches.
School lunches, however, are currently under the purview of the Department of Agriculture, which recently ended a program that provided minimally processed foods from local producers directly to schools.
Mr. Kennedy has made a number of polarizing statements blaming environmental toxins and a broken food system for the “epidemic” of chronic disease that has left America’s children among the sickest in the developed world.
He has also espoused fringe theories about the role that diet can play in preventing diseases such as measles, while casting doubt on the efficacy and safety of proven vaccines.
