Since its founding in 1979, the United States Ministry of Education (DOE) Shaping federal student loan policies, which in turn affect the rise in education costs and the expenses of loans. As President Donald Trump drastically shrank and eventually closed, one expert said the entire private lending system was better than transferring the government to other government agencies.
“The Clinton administration introduced the direct loan program, so it was a competitor to the public-private system, and now the government will be a competitor to issuing loans, both systems coexisted for a few years in 2010 until we got Obamacare’s 2010, and we basically used some newspapers to help Fox pay to help Fox pay to help Fox pay, and paid OBAIN, paid OBANS pay, paid OBAN, paid OBAN,” digitized in the interview.
“So, we have been in the government loan field since 2010,” he added.
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The morning sun illuminates the front of the Washington Department of Education building on February 4, 2025. (Reuters/Kevin Lamarque)
initial, After Trump The government signed an executive order in March to remove the DOE, proposing to transfer the $1.6 trillion student loan portfolio to the Small Business Administration (SBA). However, recent developments have shown that the Treasury can assume responsibility for federal student loans.
The Trump administration also proposed transferring Pell grants and Chapter One funds to other federal agencies, effectively reducing the role of the department in overseeing major education programs.
“If we just transfer student loans to the Treasury and don’t change anything else about the system, I don’t think it’s going to have any real impact,” Gillen said. “So all these loan terms have been set by Congress, so just changing the management family that oversees paperwork in the backstage, that doesn’t have any impact.”
The current system encourages “bad investment” by providing funding to students Or education Gillen said there were no realistic expectations for repayment. Instead, private lenders who prioritize repayment risks may avoid funding such loans. He suggested moving to a private system would provide better incentives for colleges and students, as colleges would face pressure to develop students who can repay their loans, and students are more likely to choose areas that lead to successful careers.
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Education Secretary Linda McMahon spoke with Fox News chief political host Bret Baier after President Donald Trump demolished her agency. (Fox News/Special Report)
Gillen added that it is difficult for the government to release student loans through bankruptcy, with only a few exceptions, but the rule does not apply to private lenders.
“We can do something to encourage private lenders to be basically willing to issue these loans. So one is clarifying how bankruptcy laws work with these income-driven loans,” he said.
Some lawmakers have worked hard to solve this problem. Rep. Steve Cohen, Danny K. Davis and Eric Swalwell reintroduced Private Student Loan Bankruptcy Fair Actattempting to make private student loans freed in bankruptcy, similar to other types of consumer debt.
U.S. Secretary of Education Linda McMahon signed an executive order in Washington, DC on March 20, 2025 to reduce the size and scope of the Eastern Department of Education in the White House East Room (Chip Somodevilla/Getty Images)
Currently, the government can decorate wages without litigation, which makes the process more efficient and less costly, which will also be beneficial for private lenders.
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The introduction of income-driven repayment programs in the 1990s began with the 1994 Repayment Program (ICR). President Bill Clinton. These plans allow borrowers to repay loans based on income, extend the loan term and increase the total interest paid. Although they provide immediate financial relief, they also bring higher long-term costs to some borrowers.
By fiscal year 2024, Doe held About $1.6 trillion in student loan debt, $85.7 billion in new loans were issued, and $45.3 billion allocated for undergraduate education, while $40.4 billion in graduate education.
