President Donald Trump has long advocated for dismantling the U.S. Department of Education (DOE), arguing that education policy should be handled by individual states rather than the federal government. With his renewed bid for the White House, many student loan borrowers are left wondering: if the DOE is shut down, could federal student loans be canceled?
The answer is more complicated than it may seem. While eliminating the DOE would drastically alter how federal student loans are managed, it wouldn’t automatically erase student debt. Let’s break down what this could mean for borrowers and the future of federal student aid.
Can Trump Legally Abolish the Department of Education?
The short answer: Not unilaterally.
The DOE was established in 1979 through congressional legislation, meaning it would take an act of Congress to dismantle it. A president cannot simply eliminate a federal agency via executive order. Even if Republicans control both the House and Senate, abolishing the DOE would face significant political and logistical hurdles.
Past attempts to dismantle the DOE—including efforts during Ronald Reagan’s presidency—failed due to lack of congressional support. According to Jonathan E. Collins, a political science and education professor at Teachers College, Columbia University:
“You can’t just drop a bomb on the Department of Education and turn it into rubble. Legally, it has to start with Congress, not the president.”
Even if the DOE were successfully dissolved, its responsibilities wouldn’t vanish. Instead, they would be redistributed to other federal agencies, which is crucial in understanding what might happen to student loans.
Would Student Loans Be Canceled If the DOE Is Shut Down?
Eliminating the DOE would not erase federal student loan obligations. Student loans are legally binding financial agreements between borrowers and the government. The promissory notes signed by borrowers ensure that the debt remains intact regardless of which agency oversees student aid.
Instead, here’s what would likely happen:
1. Student Loan Oversight Would Shift to Another Federal Agency
If the DOE were dismantled, its student loan management responsibilities would likely be transferred to another federal agency. Potential candidates include:
- Department of the Treasury: Conservatives advocating for the DOE’s elimination have suggested moving the Office of Federal Student Aid (FSA) under the Treasury Department, where it could function similarly to a bank.
- Consumer Financial Protection Bureau (CFPB): Given its role in regulating financial institutions, the CFPB could take over student loan servicing and borrower protections.
- A Newly Created Agency: Some lawmakers may propose establishing a new agency solely focused on handling student loans and financial aid programs.
According to a report by ABC News, Rick Hess, a senior fellow and director focused on education policy at the right-leaning American Enterprise Institute, says
“The FSA would be a better fit for the Treasury Department because it’s essentially a mega-bank. It’d make more sense to have it overseen by officials at Treasury who work closely with financial institutions and oversee federal revenue collection.”
2. Student Loan Servicers Would Still Manage Repayments
The DOE does not directly handle loan payments—private loan servicers do. These companies would continue managing federal student loan repayments, meaning borrowers would still be required to make monthly payments.
3. Loan Forgiveness Programs Could Be at Risk
One of the biggest concerns regarding the DOE’s potential elimination is the future of student loan forgiveness programs, such as:
- Public Service Loan Forgiveness (PSLF)
- Income-Driven Repayment (IDR) Plans
If these programs are currently housed under the DOE and the department ceases to exist, future loan forgiveness could become more difficult to qualify for—or disappear entirely.
4. New Student Loans Would Still Be Issued, But With Possible Changes
If student loan programs shift to another federal agency, new student loans may come with different terms. A Trump administration could push for a return to private-sector lending, similar to the pre-2010 system where banks issued federally backed student loans instead of the government directly lending to students.
What Borrowers Should Expect
Eliminating the Department of Education wouldn’t mean instant debt cancellation. Instead, borrowers would likely experience:
- A shift in who manages federal student loans
- Changes in loan forgiveness eligibility
- Potential privatization of new student loans
For now, student loan borrowers should stay informed, keep records of their payments, and prepare for potential changes in loan servicing and forgiveness programs. While Trump’s proposal to dismantle the DOE remains uncertain, one thing is clear: student debt is here to stay unless separate legislation is passed to forgive loans outright.
