Truth matters. Community matters. Your support makes both possible. LAist is one of the few places where news remains independent and free from political and corporate influence. Stand up for truth and for LAist. Make your year-end tax-deductible gift now.
Trump says Education Department will no longer oversee student loans and 'special needs'
The federal student loan portfolio — which manages about $1.6 trillion in loans for roughly 43 million borrowers — is currently overseen by the Education Department's office of Federal Student Aid.
(
Mario Tama
/
Getty Images
)
Listen
3:55
Trump says Education Department will no longer oversee student loans, 'special needs'
President Donald Trump continued the unwinding of the U.S. Department of Education on Friday, announcing that the management of the entire federal student loan portfolio and of the department's "special needs" programs would be moved to other federal agencies effective immediately.
Appearing in the Oval Office with Defense Secretary Pete Hegseth, Trump said, "I've decided that the SBA, the Small Business Administration, headed by Kelly Loeffler, a terrific person, will handle all of the student loan portfolio. We have a portfolio that's very large," Trump said.
The federal student loan portfolio — which manages about $1.6 trillion in loans for roughly 43 million borrowers — is currently overseen by the Education Department's office of Federal Student Aid (FSA). That office has been gutted by the recent raft of buyouts, early retirements and last week's broad reduction-in-force.
It was not clear, based on Trump's announcement, how or if the remaining employees and expertise at FSA would be transferred to the Small Business Administration. Trump said he would move student loans "out of the Department of Education immediately" and that Loeffler and her staff are "all set for it. They're waiting for it. It'll be serviced much better than it has in the past. It's been a mess."
-
California health care was hit hard in 2025: more than 3 million may lose Medicaid, Covered California subsidies at risk. -
Trump's order doesn't automatically revoke laws targeting marijuana, which remains illegal to transport over state lines. -
DHS's handling of the incident raises questions about the department's oversight mechanisms to investigate employee misconduct.
In a tweet after the Oval Office announcement, Loeffler said, "The SBA stands ready to take the lead on restoring accountability and integrity to America's student loan portfolio."
Multiple sources at FSA who could not speak publicly for fear of retribution said they were blindsided by the news.
Sponsored message
The office of Federal Student Aid referred NPR's request for comment to the Education Department.
The Education Department, White House and the Small Business Administration did not immediately respond to a request for comment.
As recently as Thursday, White House press secretary Karoline Leavitt assured reporters that, "when it comes to student loans and Pell Grants, those will still be run out of the Department of Education."
After announcing the movement of the federal student loan portfolio, Trump then said, "Bobby Kennedy, the Health and Human Services, will be handling special needs."
This appears to be a reference to the federal law known as the Individuals with Disabilities Education Act (IDEA), which the Education Department administers. The law guarantees students with disabilities the right to a free, appropriate education and, in 2024, sent roughly $15 billion to schools to help pay for special education services.
The Education Department also has a dedicated Office of Special Education Programs.
The Department of Health and Human Services, headed by Secretary Robert F. Kennedy, did not respond to multiple requests for comment.
Sponsored message
In speaking to reporters Thursday, Leavitt also suggested IDEA funding would remain at the department, saying "any critical functions of the department" would remain. When asked specifically about funding for students with disabilities, she responded: "Same answer."
Administration of IDEA and the federal student loan portfolio are two of the Education Department's core responsibilities, and it's unclear if transferring either to other federal agencies can be done without a vote of Congress.
The news comes a day after Trump signed an executive order calling on U.S. Secretary of Education Linda McMahon to "take all necessary steps to facilitate the closure of the Department of Education."
Copyright 2025 NPR
You come to LAist because you want independent reporting and trustworthy local information. Our newsroom doesn’t answer to shareholders looking to turn a profit. Instead, we answer to you and our connected community. We are free to tell the full truth, to hold power to account without fear or favor, and to follow facts wherever they lead. Our only loyalty is to our audiences and our mission: to inform, engage, and strengthen our community.
Right now, LAist has lost $1.7M in annual funding due to Congress clawing back money already approved. The support we receive before year-end will determine how fully our newsroom can continue informing, serving, and strengthening Southern California.
If this story helped you today, please become a monthly member today to help sustain this mission. It just takes 1 minute to donate below.
Your tax-deductible donation keeps LAist independent and accessible to everyone.
Right now, LAist has lost $1.7M in annual funding due to Congress clawing back money already approved. The support we receive before year-end will determine how fully our newsroom can continue informing, serving, and strengthening Southern California.
If this story helped you today, please become a monthly member today to help sustain this mission. It just takes 1 minute to donate below.
Your tax-deductible donation keeps LAist independent and accessible to everyone.
Senior Vice President News, Editor in Chief
