US education department ‘not dead but being dismantled’

Moving the student loan portfolio into the Treasury is the surest sign yet that the Trump administration intends to achieve its goal of shuttering the Department of Education by “hollowing it out”, it has been warned.

A year since an executive order set in motion moves to achieve a long-held Republican ambition to close the department, which they argue never had proper constitutional standing, the US administration announced earlier this month that the Treasury will take on management of default borrowers before eventually assuming all responsibility for student loans.

Announcing the move, the White House said the $1.7 trillion (£1.3 million) student loan portfolio has been “badly mismanaged” for years and it is now shifting it to the “world-renowned expertise” of the Treasury.

In changing how it functions on a day-to-day basis, the president was redistributing the department’s most important function, according to Marybeth Gasman, distinguished professor of education at Rutgers University – New Brunswick.

“The Trump administration is trying to hollow it out so it’s nothing but a shell,” she said. It was also recently announced that the department would be moving to smaller Washington headquarters, replaced by the Energy Department in its current building.

Although the White House promises improved efficiency, Gasman warned that the disruption will add new layers of bureaucracy, create confusion and place additional strain on college financial aid offices.

“If federal student aid becomes spread across several agencies, colleges are going to be dealing with more bureaucracy and mess at the federal level. I have a feeling that this mess is part of the point for the Trump administration.”

Even though Congress is the only entity that can legally abolish the department, Gasman said Trump is pursuing a serious effort to reduce its role by diminishing its operations.

“The department is not dead but it no longer functions the way it did. It also has very little influence. I would say that it is being gradually disassembled in front of us.”

Andrew Moran, professor of politics and international relations at London Metropolitan University, said there was a logic to what the administration was trying to do, arguing that the Treasury has the financial expertise and knowledge to oversee the vast debt portfolio.

He said it might therefore be best placed to help students or claw back some of the funds but the recent UK student debt crisis showed the scale of the challenge.

“It is a politically hard problem to solve, and it may become a poisoned chalice for the US Treasury Department.”

Jennifer Steele, professor in the School of Education at American University, said the people most likely to be affected by any changes in loan repayment processes are individual borrowers who repay their loans via servicing agencies.

“If the intermediate servicing agencies change as a result of the transition, this could cause administrative disruption and uncertainty for borrowers.”

Without student loans, civil servants would still be administering need-based grants to primary and secondary schools and ensuring civil rights protections for students.

“There are clearly efforts under way to change business as usual at the Department of Education but the department manages a complex set of responsibilities and much of that work remains ongoing,” said Steele.

“But with fewer hands on deck, those who are working there are stretched thin.”

Frederick Hess, senior fellow and director of education policy studies at the American Enterprise Institute, a conservative thinktank, said the move signifies the biggest step yet in Trump’s efforts.

Although there might be some short-term issues, he said the Treasury taking responsibility for student loans made sense overall.

“The scope of changes depends a lot on the courts, what happens if Democrats have a good November, and who is president in 2029.”

“In higher education, [the department]’s role has been much reduced but the federal role has expanded due to the aggressive way in which the administration has pursued civil rights investigations and tackled research funding,” he added.

patrick.jack@timeshighereducation.com