Trump Cleaves Student Loan and Special Education Services From Education Dept.

On Friday, President Trump revealed a significant restructuring of the Education Department, announcing that it would no longer oversee the nation’s $1.6 trillion student loan portfolio or manage programs for students with special needs. This move aligns with his long-standing goal of dismantling the agency.

According to Mr. Trump, student loans will now fall under the jurisdiction of the Small Business Administration, while programs related to special education and nutrition will be transferred to the Department of Health and Human Services.

Speaking to reporters in the Oval Office, Mr. Trump stated that these changes would take effect “immediately.” He expressed confidence in the restructuring—despite swift legal challenges from critics—asserting that it would “work out very well.”

“The loans will be managed far better than before. It’s been a disaster,” he remarked, adding, “Education will be significantly improved, at half the cost.”

His announcement followed an executive order issued on Thursday, which aimed at shutting down the Education Department. While Congress must approve the department’s dissolution, Trump’s administration has already significantly reduced its workforce by over 50% and cut $600 million in grant funding since he took office.

Reallocating these responsibilities would further diminish the department, though education experts and union representatives questioned whether Trump had the authority to implement such changes unilaterally—especially regarding student loans. Many warned that rather than improving service, the move could lead to greater confusion for borrowers.

White House Press Secretary Karoline Leavitt insisted on Thursday that key programs, including student loans, would still operate within the Education Department, though in a scaled-down form. When pressed for details on Friday about what specific functions would be transferred and under what legal authority, she pointed to Congress.

“President Trump is using every available executive power to dismantle the Department of Education and return control of education to the states while ensuring critical services—such as student loans, special education, and nutrition programs—remain protected,” she stated. “The president has always maintained that Congress has a role to play in this process, and we expect their support in achieving this goal.”

Leading Republican lawmakers have already committed to introducing legislation to back Trump’s efforts to dissolve the Education Department.

Beth Maglione, interim president and CEO of the National Association of Student Financial Aid Administrators, noted that it remains “uncertain” whether Trump has the authority to shift student aid programs away from the department. She suggested that even with congressional approval, the transition would require extensive planning.

“The administration would first need to establish a clear strategy outlining how student aid programs would be managed under the Small Business Administration, allocate appropriate staff and resources, and build the necessary infrastructure to support the shift,” she explained. “Without a comprehensive plan, a critical question remains: How will this restructuring be implemented without disrupting students and educational institutions?”

In the executive order, Trump compared the federal student loan portfolio to that of Wells Fargo, highlighting the disparity in staffing. While the bank employs over 200,000 people, the Office of Federal Student Aid within the Education Department has only 1,500 employees.

“The Department of Education is not a bank and should return financial operations to an entity better suited to serve American students,” the order stated.

On Thursday, Trump reassured the public that legally mandated funding for high-poverty schools, federal Pell Grants, and resources for children with disabilities would remain intact, even as the department undergoes drastic changes.

He emphasized that this initiative was particularly important to Linda McMahon, his education secretary, who had previously led the Small Business Administration during his first term.

The restructuring announced on Friday will shift major Education Department programs into agencies that traditionally have little direct involvement with schools and are themselves undergoing significant staff reductions.

On Thursday, Kelly Loeffler, the head of the Small Business Administration, announced that the agency would cut 43% of its approximately 6,500 employees. Meanwhile, Robert F. Kennedy Jr., Secretary of Health and Human Services, has offered buyouts to a substantial portion of the agency’s 80,000 workers.