Washington, D.C. – The U.S. Department of Education (ED) yesterday announced the Federal Student Assistance Partnership, which will begin transferring administration of the federal student loan system to the U.S. Department of the Treasury.
In response, Nadine Chabrier, senior policy counsel at the Center for Responsible Lending (CRL), issued the following statement:
This unlawful move is the latest step in Secretary McMahon’s effort to dismantle the Department of Education and will create even more confusion in an already unstable student loan repayment system. More than 8.8 million borrowers are already in default, and millions more are at risk after being pushed out of affordable repayment options like the previously established SAVE plan. Starting this transfer with default collections will hit struggling borrowers the hardest and shows a clear disregard for those already facing financial hardship.
At a time when families are grappling with a rising affordability crisis, the administration should be focused on delivering relief instead of shifting responsibility to an agency with little expertise in borrower protections. We urge Congress to demand transparency on how this transfer will protect borrowers and uphold their rights.