Personal Finance

What Happens to My Student Loans if Trump Gets Rid of the Department of Education?

Maurie Backman

Published: February 6, 2025 1:40 pm

Although President Trump has only been in office for a matter of weeks, he’s already trying to make big changes. And one of those changes is to upend the Department of Education by either closing parts of it or eliminating it for good.

Clearly, that could have wide-reaching impacts. And one of the areas it could impact is student loans.

The Department of Education is tasked with underwriting federal student loans — the loans millions of students rely on to cover higher education costs. And the fear is that if the Department of Education is eliminated, future college attendees will have more limited options in the context of borrowing to fund their studies. Or, at the very least, there could be a huge lag in approving federal student loans, forcing many people to put their studies on hold.

However, this also begs the question: What happens to your existing student loans if the Department of Education goes away?

Your debt probably won’t disappear

If you’re hoping that the elimination of the Department of Education leads to your student loans being forgiven, here’s some disappointing news. Even if that department goes away completely, it’s unlikely that you won’t have to pay your student loans back.

If you took out federal student loans, chances are, you’re now working with a loan servicer to make and manage your payments. So you may be able to continue working with that loan servicer uninterrupted.

It’s also possible that the Treasury Department would take over the administration of federal student loans if the Department of Education is totally dismantled. And depending on how things shake out, that could help avoid a lag in issuing new federal loans. But it also means that there’s no reason to expect that your debt would just disappear.

How to get student debt relief

There’s no sense in hoping that the Department of Education goes away so you can get out of paying your student loans. That’s unlikely to happen. But if you’re having trouble keeping up with your federal student loan payments, you should know that there may be options for relief.

One option you probably don’t want to consider is refinancing those loans. If you refinance with a private lender, you’ll lose the protections federal student loan borrowers get to enjoy. Plus, in today’s interest rate environment, you may not get a better rate on your student debt than what you already have.

But remember, the upside of taking out federal loans is getting access to repayment plans that could ease that burden You may, for example, qualify for an income-driven repayment plan that results in lower monthly payments than what you’re on the hook for now.

Also, you may have the option to put your student loans into forbearance, or to defer payments on those loans, if you’re experiencing a financial hardship. You’ll need to contact your loan servicer to discuss your options, but you shouldn’t hesitate to do so if paying off that debt every month has become a huge burden. Similarly, if you think you’re at risk of missing payments, it’s better to get ahead of that issue before falling behind.