The federal Departments of Education (ED) and the Treasury announced earlier this month that the latter agency would soon be taking responsibility for the nation’s $1.8 trillion student loan portfolio. The agreement follows a year-long process of offloading responsibilities at ED, which began with an executive order calling for the Secretary of Education, “to the maximum extent appropriate and permitted by law, take all necessary steps” to close the department. Since ED was created by Congress, however, neither the President nor the Secretary of Education have that authority. Instead, Secretary McMahon has been utilizing a series of interagency agreements to slowly chip away at ED, culminating in this most recent announcement about student loans, one of the department’s largest responsibilities.
As the Treasury takes over student loan management, borrowers shouldn’t feel much impact. While there may be a few bumps in the road, both the interagency fact sheet and Secretary McMahon’s letter to borrowers assure borrowers that service and quality of service should be unaffected by the changeover. In fact, neither have very much to say about the impact to borrowers at all. While some advocates are wary, having witnessed the issues over the last few years plaguing servicer changes, it’s still too early to even know when the changeover will happen. The agreement will be implemented in phases, beginning with those currently in default. Hopefully, by the time they get to the general population of borrowers, any kinks should be worked out.
We’ll continue to update as we know more about this process, especially of any unexpected hiccups. If you’re concerned about how this change may impact your student loans, give us a call. We’re here to keep you up-to-date on all policy changes and make sure you have the full picture as you manage your student loans.
.png)
