Trump Hands Defaulted Student Loans to Treasury, Because What Could Go Wrong?
KEY POINTS
- •The Department of Education announced on Thursday it will transfer defaulted federal student loans to the Treasury Department starting in 2026.
- •Secretary Linda McMahon cited Treasury's financial expertise as the reason for the shift, citing Education’s ‘decades of mismanagement.’
- •Advocates raised concerns about borrower confusion and Treasury’s unfamiliarity with legal rights during this complex handoff amid repayment plan changes.
On a Tuesday nobody asked for, the Trump administration initiated a classic game of hot potato by handing over the $1.7 trillion federal student-loan mess—especially the nearly 9 million defaulted loans—to the Treasury Department starting March 2026. Education Secretary Linda McMahon praised Treasury’s 'world-renowned' finance wizards to fix decades of educational mismanagement, as if financial 101 magically applies to student debt chaos. Treasury Secretary Scott Bessent promised to discipline that wild $1.7T beast using his tax data and magic spreadsheets. Meanwhile, advocates like Kyra Taylor warned about new confusion for borrowers—because nothing says clarity like shifting loan nightmares between federal departments during repayment changes cooked up by "big beautiful" Trump legislation.
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(1 of 3)Sure, let’s move the colossal $1.7 trillion student debt dumpster from Education to Treasury, because aggressive tax collectors are way friendlier than bureaucrats who failed for decades. What could possibly go wrong with 9 million defaulters now Treasury’s problem?
Almost 9 million Americans are toxic assets now Treasury’s headache. Maybe throw in the Small Business Administration too? Let’s see who really enjoys hounding broke millennials.
Trump is dismantling the Department of Education by outsourcing student debt misery to Treasury—because nothing screams progress like shuffling problems instead of solving them.
Source: Businessinsider | Published: 3/19/2026 | Author: Ayelet Sheffey
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