Treasury to Manage Defaulted Federal Student Loans Amid Education Department Restructuring

The Education Department will transfer its roughly $1.7 trillion federal student aid portfolio to the Treasury, which will handle defaulted loan collections and, in a later phase, administer FAFSA, as part of interagency moves critics say amount to dismantling the department. Officials say the changes aim to fix long‑standing mismanagement and improve programs without requiring borrowers to take action, while unions and lawmakers warn of confusion and higher costs amid staff cuts and ongoing servicer performance concerns.