Trump tasks Treasury Dept to handle collection of student loans as delinquency rates increase

The Trump administration said Thursday it will shift responsibility for collecting unpaid student loans to the US Department of the Treasury. Currently, the US Department of Education manages the nation’s roughly $1.7 trillion in federal student loan debt, which is owed by about 42 million people.

Officials from both departments said the Treasury will gradually assume a larger role in handling student debt, ultimately offering “operational support” for existing loans.

President Donald Trump has long expressed plans to dismantle the Education Department and return more control over education to individual states. US Secretary of Education Linda McMahon described the new collaboration as a “historic step toward breaking up the Federal education bureaucracy,” per CNBC.

The shift could affect borrowers differently, with some experiencing changes sooner than others.

“Borrowers are craving clarity and certainty around student loans,” said certified financial planner and certified student loan professional Landon Warmund at Reliant Financial Services in Kansas City, Missouri. “With this recent announcement, it’s adding more uncertainty into the mix.”

According to the administration, the Treasury is better equipped for debt collection due to its offset program, which is used to recover overdue obligations such as child support and other government-related debts.

“Under President Trump’s leadership we are undertaking the first serious effort to clean up a $1.7 trillion portfolio that has been badly mismanaged for years,” US Secretary of the Treasury Scott Bessent said in a statement about the transition.

“Treasury has the unique experience, the operational capability, and the financial expertise to bring long overdue financial discipline to the program and be better stewards of taxpayer dollars,” Bessent added.

The Education Department reports that about 9 million borrowers are currently in default. The move comes as the delinquency rate for student loans has been increasing. 25 percent of borrowers are behind on payments, 10 percent of all loans are over 90 days overdue, and in 2025's fourth quarter, 1 million people defaulted on their debts.