President Trump announced Friday that he plans to move management of the federal student loan program to the Small Business Administration (SBA).
“We have a very large portfolio. Lots of loans. Tens of thousands of loans. Quite complicated transactions. And that’s coming out of the Department of Education soon,” Trump said, and there are currently around 43 million Americans with student debt.
Read more: Tips for quickly paying off student loans
The president offered little details on how small business managers envision managing loan programs or what borrowers can expect in the next few weeks, but suggested the process would be smoother.
“They’re all preparing it, they’re waiting for it,” he said, referring to the SBA. “We provide a much better service than before. It’s confusing.”
The White House and the Commerce Department did not reply to requests for comment. Education officials featured Yahoo Finance in an interview with Education Secretary Linda McMahon on Fox News on Friday.
Trump has signaled for weeks that he intends to oust student loans from the Department of Education, but it is unclear why the White House has settled on placing it in the Small Business Administration. Many conservative experts argue that student loans could be better managed by the Treasury Department, which has long acted as debt collectors for most of the federal government.
The SBA, currently led by Georgia Senator Kelly Roeffler, is a relatively small division. Additionally, small business lending programs have been running for a long time, but rarely took responsibility for anything close to the size and scope of student loan programs. Management of rescue operations for pandemic small businesses, such as payroll protection programs, has often been criticized as scattered and has been plagued by fraud.
On Friday, the SBA announced plans to cut its own workforce by 43%.
“This has been discussed primarily from the Treasury perspective. It is about administration to explain the rationale for this move, and I haven’t seen them yet.” “I think it’s fair to ask difficult questions about why the SBA works, until they make that claim.”
Most of the day-to-day operations of the student loan program are handled by major contractors. However, Ministry of Education officials will closely monitor the work of private companies, ensure that students are properly serviced and corrected issues when issues arise. Unless the SBA essentially takes over existing staff from the Federal Student Aid Agency, it is likely that there is no expertise to maintain the program’s functioning, a former official told Yahoo Finance.
The story continues
