President Trump moving student loans from the Education Department to the Small Business Administration (SBA) is rattling those affected, who say it is prime evidence that the White House has no real plan for its efforts to dismantle the Department of Education.  

Trump signed an executive order Thursday seeking to wind down the Education Department, and he said student loans would move to the SBA the next day the same day that agency announced it was cutting 40 percent of its workforce.   

While advocates have been displeased with the student loan system for a long time, they worry more problems would be created than solved by taking the biggest program the Education Department controls and giving it to an agency that is seeing a sweeping reduction in force.

“Borrowers right now are already having to experience an unprecedented level of chaos and uncertainty,” said Aissa Canchola Bañez, policy director for Student Borrower Protection Center.

Moving student loans, she added, to the SBA, which “has no background of familiarity with the student loan program, with the rights afforded to student loan borrowers under the Higher Education Act it will only make things worse for borrowers.”

The president, who also announced that programs for students with disabilities would be shifting to the Health and Human Services Department, has offered no follow-up details on logistics for student loan borrowers, but the move was cheered by both the Department of Education and the SBA.

“Whether it’s a loan for a business or a business degree, SBA is prepared to restore efficiency and accountability to our taxpayer-funded loan programs,” Kelly Loeffler, head of the SBA, said in a post on the social platform X.  

The same day, Loeffler confirmed administration plans to cut about 2,700 positions out of its workforce of nearly 6,500.

“All of this just really underscores that there has been no planning. There is no plan, and that is the most scary, frankly, and dangerous thing about this. Because 44-plus million people owe money to the federal government from their student loans, and they are already in a state of confusion,” said Jessica Thompson, senior vice president for the Institute for College Access & Success. 

Any conversation around moving the student loan portfolio “requires thoughtful, careful planning and for Congress to be involved,” Thompson added.  

An Education Department spokesperson said, “no changes have been made yet, so there are no changes for student loan borrowers to navigate at this time.” 

Experts are advising borrowers to reach out to their loan officers and carefully document all their repayment efforts, pointing out that the department has also removed approximately half of its workforce.

“I don’t know what element of federal government I want chaos to be in, but I think that one of the last places is going to be federal student aid, because that directly affects just millions and millions of people in a very real, like paying for college and managing their loans,” said James Murphy, director of career pathways and postsecondary policy at Education Reform Now.  

Borrowers are already in a precarious situation, with millions are caught in limbo as the Trump administration seeks to claw back student loan forgiveness programs that were established or expanded under former President Biden.  

About 8 million borrowers are in forbearance under Biden’s Saving on Valuable Education income-driven repayment (IDR) plan, which was ruled illegal by a court last month.

After that ruling, the Trump administration removed access to apply for any IDR plans. Although the Department of Education said access would be restored soon, it has not happened yet.  

Currently, advocates say they have little hope to offer the 45 million individuals with federal student loans.

“There’s no good advice, and any expert giving advice doesn’t know what he’s talking about. There’s no good advice to give. This is the Wild West,” said Alan Collinge, founder of Student Loan Justice. “Right now, borrowers have zero power, and we’re being pushed around on a chessboard like pawns. We have no power. We have no leverage.” 

Collinge has a theory that the Trump administration is looking to “crash the federal student loan program” in order to devalue it and sell it to a third party.  

Canchola Bañez said borrowers need to do three things: download all their payment history from the Federal Student Aid portal, screenshot any sort of tracking information if they are on a plan that allows for forgiveness at the end, and reach out to members of Congress to help with their case.

“Members of Congress have entire teams that are dedicated to accessing casework on behalf of constituents that are having challenges with the federal agency, and these loans are directly from the Department of Education, and so borrowers should reach out for help from the members of Congress, regardless of their party, and demand that their members start working on their behalf, especially if they’re not able to get answers from the department,” she added.