Treasury Takes Over Defaulted Federal Student Loans with New Online Support Center

The Trump administration is advancing its plan to shift management of defaulted federal student loans to the Treasury, kicking off the first phase with the launch of the Defaulted Loans Support Center. This new web portal consolidates resources for borrowers who have fallen behind, eliminating the need for printed paperwork to access rehabilitation or consolidation options. During a beta test involving 15,000 borrowers, more than 5,000 completed online payments, a senior Education Department official said.

Education Secretary Linda McMahon emphasized that the Department was never meant to function as a large bank and that partnering with Treasury will improve aid administration. While Treasury officials tout the portal’s efficiency, over 60 Democratic lawmakers have urged a halt to the transfer, and a Republican-led bill seeks to codify it. Default numbers continue to rise, with 9.3 million borrowers in default as of June 30.