Moving Student Loans to Treasury Gets Little Traction

Inside Higher Ed

By Andrew Kreighbaum
May 30, 2017

The Trump administration has held internal discussions about relocating some functions of the Department of Education to other federal agencies, including moving its $1.4 trillion student loan portfolio to the Treasury Department, according to media reports. But that idea, which has periodically resurfaced for years, hasn’t found serious interest among members of Congress.

And key Democrats indicated serious opposition to the idea after those reports last week.

Senator Elizabeth Warren, a Massachusetts Democrat, said the federal student loan system desperately needs reform, but there is no evidence that Treasury would be any better at advancing student interests. “Disruptive organizational changes that do not address this basic concern will be at best meaningless and at worst harmful for the millions who struggle daily with these loans,” Warren said.

Representative Bobby Scott, the ranking Democrat on the House education committee, said that Treasury’s focus is on collecting money, not access to higher education. And Treasury’s record administering the Earned Income Tax Credit does not suggest it views outreach and customer service as core parts of its mission, he said.

Representative Virginia Foxx, the Republican chairwoman of the committee, said the idea should be considered by Congress in light of what she called a history of inefficiency and mismanagement at FSA.

“Having a debate on ideas to ensure our federal financial aid system serves the best interests of students, families and taxpayers is a debate worth having,” Foxx said.

The Department of Education declined to comment directly on whether those talks had taken place. Liz Hill, a department spokeswoman, said Secretary Betsy DeVos looked forward to replacing Runcie with someone qualified who will restore public trust in the Office of Federal Student Aid.