Treasury Department Takes On Collection Of Nearly $2 Trillion In Student Loans

News Brief

Monday, April 27, 2026 — 10:01 am

The U.S. departments of Education and Treasury entered into an agreement to recoup nearly $1.7 trillion in student loans to mitigate a “long history of mismanagement, particularly during the Biden Administration,” according to a statement.

The announcement describes the Treasury as “well positioned” to take on management of student loan repayment. According to reporting by Politico, the Treasury Department has resisted responsibility for handling overdue student debt and the move is part of President Donald Trump’s plan to close the Department of Education.

Indeed, the federal announcement said the decision to gradually shift collection of student loans to the Treasury Department comes as the Education Department “returns education to the states and breaks up the federal education bureaucracy.”

Under the agreement, Treasury will assume operational responsibility for collecting on defaulted federal student loan debt through private collection agencies. Under President Biden’s administration, the statement said, all private collection contracts were terminated in 2021, leaving the Education Department without the capacity to support the more than 9 million borrowers in default.

The Treasury Department disburses funds for federal student loans and has already contracted with private collection agencies experienced in collecting student loans, according to the government’s statement. Politico reports that the Treasury Department’s experience is more focused on “forced-collection tactics, like seizing wages to repay loans,” and quotes government officials saying that the department is not well versed in flexible options that could help student borrowers get out of debt and repair their credit.