Overview
- Phase one shifts roughly 9 to 9.2 million defaulted accounts, about $180 billion of debt, to Treasury for collections and efforts to return borrowers to repayment.
- Later phases envision Treasury providing operational support over non‑defaulted loans where permitted by law and potentially taking on FAFSA administration, with no set timetable.
- Borrowers are told to take no action and to keep paying their current servicers, and involuntary collections on defaulted loans remain on hold after a previously announced delay.
- Officials cite a $1.7 trillion portfolio with fewer than 40% of borrowers in repayment and nearly a quarter in default as justification for relying on Treasury’s financial expertise.
- Advocates, unions, and some lawmakers warn of borrower confusion, legal limits on transferring statutory duties, and note this is the tenth agreement in the broader push to dismantle the Education Department.