Jordan Nathaniel Fenster
The Middletown Press, Conn. (TNS)
President Donald Trump announced Friday that management of student loans would fall under the Small Business Administration, instead of the Department of Education.
Speaking to reporters in the Oval Office, Trump said that, “the Small Business Administration, headed by Kelly Loeffler, will handle all of the student loan portfolio,” according to The Hill.
“I don’t think the education should be handling the loans…I think it will be brought into small business,” Trump said.
The move follows an executive order, signed Thursday, attempting to dismantle the Department of Education.
The closure of the entire department would require an act of Congress, but Trump and his newly appointed secretary of education, Connecticut resident Linda McMahon, can shutter or shift pieces of the department that are not protected in law. McMahon ran the SBA during Trump’s first term in office.
State Sen. Matt Lesser, D-Middletown, said some student loan borrowers had already experienced difficulty accessing student loan repayment programs.
“If this is just a question of reorganizing, we wouldn’t see these real access issues that borrowers are finding that the Department of Education is failing to enroll them in Income-Driven Repayment and public service loan repayment programs,” he said.
Late last month, the Washington Post reported that the application for the Income-Driven Repayment program had been removed from the Department of Education’s website, and that federal education officials had ordered a halt to all student loan repayment processing.
The American Federation of Teachers followed up on Wednesday by announcing a lawsuit in response.
“By effectively freezing the nation’s student loan system, the new administration seems intent on making life harder for working people, including for millions of borrowers who have taken on student debt so they can go to college,” AFT President Randi Weingarten said in a news release.
The complaint, filed in federal court, says there are nearly 43 million federal student loan borrowers nationwide, “with approximately $1.62 trillion outstanding in debt.”
“This shutdown, which creates significant confusion for borrowers, therefore comes at a time when the official government offices meant to assist borrowers with their loans are being shuttered,” the complaint says.
Lesser said Connecticut is “well positioned to advocate for borrowers.” The state in 2024 created the position of student loan ombudsman within the state Banking Department.
“We license student loan servicers,” he said. “My hope is that the state will be aggressive in confronting and ensuring that the federal law is complied with, with respect to Connecticut residents, because it is very concerning, and the president simply does not have the authority to not follow the law when it comes to public service loan forgiveness and Income-Driven Repayment.”
According to the Education Data Initiative, there are 507,200 students with loans living in Connecticut, 14 percent of the total state residents. Of those, there were 77,065 federal Pell Grant recipients in 2021, with an average award of $4,466.
“As the Governor recently remarked, dismantling the Department of Education would have significant negative impacts for Connecticut public schools. This effort to close down the Department of Education would also impact student loan borrowers,” said Connecticut’s Student Loan Ombudsperson, Michelle Jarvis-Lettman. “Without a centralized federal agency to oversee policies, ensure equal access, and address disparities, states will have less support in creating consistent standards resulting in confusion, administrative delays and borrower anxiety.”
She said borrowers should continue to make payments on their loans until all issues are addressed.
In total, the federal education department issued an approximate $453 million for all post-secondary education programs, including federal Pell grants and federal work study programs.
© 2025 The Middletown Press, Conn.. Visit www.middletownpress.com. Distributed by Tribune Content Agency, LLC.
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