The Department of Education was created in 1979 under President Carter. Republicans have sought to abolish it for nearly as long as it has existed, viewing it as federal overreach into what they consider a state and local responsibility. In February 2025, Trump signed an executive order directing Linda McMahon, his Education Secretary, to develop plans to return education authority to the states. What followed has been a systematic dismantling: mass layoffs of department staff, transfer of functions to other agencies, and now the legal transfer of the federal student loan portfolio to the Treasury Department.
What's Actually Happening to Student Loans.
The Treasury Department announced in early 2026 that it will begin taking over management of student loans in default — the first phase of eventually absorbing the entire Education Department loan portfolio. Simultaneously, the administration resumed aggressive collection actions on defaulted federal student loans that had been paused during and after the COVID pandemic. As of January 2026, the Treasury Offset Program is again withholding tax refunds and certain federal payments from borrowers in default. Administrative wage garnishment has begun rolling out for borrowers more than 30 days in default — deducting up to 15% of disposable income from paychecks, with notices going out since early January. These are collections resuming against borrowers who in many cases had been relying on the pause.
What Dissolving the Department Actually Means.
The Department of Education doesn't just handle student loans — it administers Pell Grants for low-income students, Title I funding for high-poverty schools, IDEA funding for students with disabilities, civil rights enforcement in schools, and federal programs for students experiencing homelessness. Eliminating the department doesn't eliminate these programs, but it does eliminate the dedicated federal infrastructure that administers them. Functions would be transferred to other agencies — many of which are themselves being downsized. The practical effect is reduced federal oversight, reduced enforcement of civil rights protections, and reduced capacity to administer programs that low-income students and students with disabilities depend on. No legislation abolishing the department has passed — the administration is dismantling it operationally while the legal structure remains.
This post distinguishes between documented facts, allegations, and analysis. Where motive, intent, corruption, or illegality remains disputed in the public record, the text attributes that judgment to court findings, official records, direct quotes, or the reporting linked below.
- CNN reporting March 26, 2026 — "Education's move is targeted for August 2026. Trump's moves to take apart the department and cut its workforce seek to fulfill decades of conservative ambition to get rid of the agency. Last week, the Treasury Department announced it will begin to take over management of federal student loans in default."
- Kiplinger reporting on student loan collections — wage garnishment resumed, up to 15% disposable income, notices January 2026; Treasury Offset Program active.
- Federal Student Aid portfolio statistics — $1.7 trillion, 43 million borrowers.