What dismantling the Education Department could mean for Ohio student loans
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President Trump holds up an executive order signed during an education event at the White House last week. Photo: Roberto Schmidt/AFP via Getty Images
President Trump's executive order last week seeking to close the Department of Education has created uncertainty for student loan borrowers.
Why it matters: The department plays a key role in managing $1.5 trillion in student debt for more than 40 million borrowers, including nearly 1.8 million Ohioans.
- A vast majority of its budget is allocated to the office that oversees student loans.
By the numbers: Ohio borrowers collectively owed $61.7 billion in federal student loan debt as of last year, according to federal data.
- The average debt was about $35,000, per an Education Data Initiative analysis.
Reality check: The directive will likely face legal opposition because eliminating a federal department requires an act of Congress.
- However, the administration can cut key funding in the meantime.
What they're saying: "Democrats want federal bureaucrats to control your child's school," wrote Rep. Jim Jordan (R-Urbana), who represents Mansfield and Ashland, on X.
- "Republicans want to give parents the choice to do what's best for their children."
The other side: Reps. Emilia Sykes (D-Akron) and Shontel Brown (D-Warrensville Heights) are vocally opposed to Trump's plan.
- Rep. Joyce Beatty (D-Columbus) called the department "a pillar of opportunity for students across Ohio and the nation," and pledged to "fight back against any attempt to undermine our children's future."
State of play: Trump is delegating student loan operations to the Small Business Administration.
- The Department of Health and Human Services will oversee special needs and nutrition programs.
Zoom in: During the transition to SBA, there could be slower processing times for loans, applications and payments, and the potential for more administrative errors.
- While it's possible there could be a pause in borrowers' payments for a period, they'd still eventually be due.
Between the lines: Pell grants, subsidized loans and work-study grants are mostly congressionally appropriated. It would take an act of Congress to get rid of them.
- So, if the Education Department shutters, these too would need to be managed by a different agency but wouldn't necessarily go away.
Zoom out: If federal student borrowing is put in jeopardy, some may turn to private loans.
- With federal loans, the interest rate is determined by the year the loan originated, not by the characteristics of the borrower. Everyone gets the same terms.
- There are no student debt forgiveness programs with private loans, and income-based repayment options are not guaranteed.
The bottom line: "If you're a current federal borrower and you're concerned, the best proactive step is to save your information," NerdWallet's lending expert Kate Wood told Axios before the executive order was issued.
- Go to studentaid.gov and screenshot or download your repayment history, she added.
Note: This story has been updated with comment from Rep. Joyce Beatty.