An American flag and a U.S. Department of Education flag are displayed outside the U.S. Department of Education headquarters in Washington, D.C., on February 1, 2025.
Annabelle Gordon | Reuters
Federal student loan borrowers facing challenges with their loans may find themselves with limited options as staff reductions at the Department of Education, initiated by President Donald Trump, unfold, according to agency employees.
Recent layoffs have affected staff members at the Education Department who were responsible for handling complaints from federal student loan borrowers and resolving their issues, a source disclosed to CNBC. At least eight of the dismissed staff were managing nearly 800 student loan borrower complaint cases, the source stated.
The remaining team members will likely need to take over these cases, but, according to the source, “I have no idea when they’ll get reassigned.”
This may force borrowers to “simply continue waiting, and they could end up in delinquency,” the staffer noted.
Each year, hundreds of thousands of individuals file complaints with the Office of the Ombudsman at Federal Student Aid, as estimated by higher education specialist Mark Kantrowitz.
Reports indicate that Trump is expected to issue an executive order directing Education Secretary Linda McMahon to eliminate the agency, a move analysts warn would exacerbate challenges for borrowers. The Wall Street Journal first reported this anticipated order.
As a congressional entity, the department cannot be dissolved without legislative approval. However, the Trump administration can gradually diminish its effectiveness through budget cuts.
Approximately 42 million Americans carry federal student loan debt, totaling over $1.6 trillion. Currently, around 9.2 million individuals—43% of the roughly 22 million borrowers with due payments—are overdue, according to a recent VantageScore report.
Education Department staffers emphasize that federal student loan borrowers require immediate support. Collection efforts are resuming for the first time in about five years following the end of pandemic-related relief, and a new repayment plan named SAVE, which millions enrolled in, is currently blocked by the courts.
“People are at risk of having their wages or benefits garnished,” a staff member said. “If an error occurs, resolving it on your own would be incredibly challenging.”
“Borrowers could find their funds being seized without a viable way to stop it,” they added.
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Employees indicated that borrowers who reach out to the Education Department for assistance with questions or complaints are now less likely to receive help, as reported by CNBC.
Sources for this story requested anonymity due to fears of retribution for being named.
A spokesperson for the White House did not respond to CNBC’s inquiries regarding the slowdown in assistance for student loan borrowers at the Education Department.
The internal team dedicated to supporting borrowers under the Public Service Loan Forgiveness program has been disbanded, according to a staff member. Consequently, remaining employees are uncertain about where to direct borrowers facing issues with this program, which helps public servants and individuals employed by nonprofits to have their debt forgiven after ten years of payments.
“We’ve lost that expertise and our ability to respond to complaints promptly,” the employee remarked.
Staff members report that borrowers are already feeling the impact.
One employee shared with CNBC their efforts to assist a woman in discharging her student debt due to her disability, expressing concern, “Every time we talk, she is scared that I won’t be there the next time.”
Employees voiced that their work in resolving complaints significantly influences people’s financial situations, and these efforts are now jeopardized.
They highlighted their success in obtaining loan discharges for victims of identity theft, educators, and numerous disabled borrowers.
Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center, criticized the actions taken at the Education Department.
“The ombudsman team was among the first to alert authorities about systemic issues,” Yu stated.
“The student loan system is flawed, and currently there is no place for borrowers to seek help.”
