40% of $1.8 trillion student loans are late on payments as Trump seeks to abolish Dept. of Ed
President Trump has announced that the Small Business Administration, instead of the Department of Education, will now bear responsibility for the $1.8 trillion student loan portfolio.
An estimated 9.2 million loan holders are delinquent regarding their student loan payments.
As President Donald Trump takes action to limit the powers of the Department of Education, a large part of student loans remain in the hands of those who have been late in their payments.
Roughly 40 percent of loans out of the total amount of $1.8 trillion in student loans are owned by loan holders who have not met their payments on time, CNN reported.
The $1.8 trillion loan portfolio, which was held by the Department of Education, will now fall under the jurisdiction of the Small Business Administration following President Trump’s executive order limiting the Department’s powers, CNN wrote.
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It is likely that 9.2 million loan holders are behind on payments, according to some estimates.
President Trump announced on Friday that he has “decided that the SBA, the Small Business Administration, headed by Kelly Loeffler, a terrific person, will handle all of the student loan portfolio,” adding: “We have a portfolio that’s very large, lots of loans, tens of thousands of loans, pretty complicated deal, and that’s coming out of the Department of Education immediately, and it’s going to be headed up by Kelly Loeffler, SBA, in the role set for it.”
Federal Student Aid warns that repeated and consistent student loan delinquency can cause damaged credit scores and eventually to loan default, which can lead, among other consequences, to court cases and “wage garnishing,” which means that employers “may be required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan.”
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Though President Trump is limiting the powers of the Department of Education and moving certain of its responsibilities, like the loan portfolio, to other government agencies, it would require action by Congress to completely abolish the Department.
A federal judge of the Eighth Circuit Court of Appeals recently blocked an attempt initiated by the former Biden administration to forgive $475 billion in student loans.
