On March 20, 2025, President Donald Trump signed an Executive Order to begin the process of disbanding the U.S. Department of Education (DOE). This sweeping move has raised significant concerns among the millions of Americans who rely on federal student loan forgiveness programs. For many, the question now is: What will happen to my student loan?
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What Does the Executive Order Mean for Student Loans?
The most immediate impact of Trump’s Executive Order is the reallocation of student loans to the Small Business Administration (SBA). The SBA, traditionally responsible for assisting small businesses, will now be tasked with overseeing the $1.6 trillion student loan portfolio. This marks a historic shift away from the Department of Education’s role in managing federal student loans, and it leaves many borrowers uncertain about the future of their federal debt.
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Federal Student Loan Forgiveness Under Trump’s Administration
While there’s no indication that President Trump will forgive student loans, his executive action is set to bring major changes. Critics argue that the end of federal loan forgiveness programs is likely to accompany the dissolution of the DOE, leaving many wondering if they will ever see their debt relieved. Trump had previously hinted at a reduction or even a complete cessation of federal loan forgiveness programs, and this move appears to be a major step toward fulfilling that promise.
The Fate of Federal Loan Programs
The transfer of the student loan portfolio to the SBA has sparked intense backlash from both political opponents and legal experts. Democratic lawmakers argue that only Congress has the power to disband the Department of Education. Meanwhile, the SBA’s lack of experience in handling federal student loans is a primary concern. Critics worry that this sudden shift will result in errors and delayed payments for borrowers.
What Does This Mean for Borrowers?
Although details on how the transition will unfold remain scarce, two agencies—SBA and the Department of Education—are already working on plans to implement the change. For borrowers, the immediate advice from financial experts is clear: stay current on payments. Keeping all receipts and ensuring payments are up to date will be critical in case of confusion during the transition.
While the future of federal student loan forgiveness remains in limbo, borrowers are advised to monitor updates carefully and continue fulfilling their obligations. Some believe the changes will eventually benefit students, but many remain concerned about potential errors in processing or mistakes due to a lack of experience with the SBA.
The Road Ahead
Though Congress is likely to challenge the move, it remains unclear how long it will take before the SBA assumes full control over student loans. As things stand, the Department of Education’s responsibilities regarding student loans are expected to be phased out over the coming months or years. In the meantime, borrowers should prepare for a potential new landscape and keep up with payments as best they can.
The bottom line: If you’re a borrower, stay on top of your loan payments. While Trump’s administration is not forgiving student loans, the shift in how they’re managed may lead to further challenges, and borrowers should be ready to adapt to any changes that lie ahead.
This Trump student loan shift marks a pivotal moment in U.S. financial policy, and students and borrowers alike will need to stay informed and prepared for what’s to come.