In a surprise move, the US Small Business Administration is set to assume responsibility for managing the nation’s federal student loans, a shift that could bring significant changes to the way borrowers repay their debts. With over 40 million Americans carrying student loan debt, this new development has sparked hopes for improved customer service, streamlined repayment processes, and innovative solutions to tackle the country’s $1.7 trillion student loan crisis.

U.S. President Donald Trump announced on Friday that the Small Business Administration (SBA) will take over the management of student loans for approximately 40 million borrowers. This comes a day after he ordered the dismantling of the Department of Education. 

The decision to significantly scale down the education agency, a key campaign promise from Trump, has sparked concerns about the fate of various services previously handled by the department, including student loan management.

“The SBA is fully prepared for this responsibility; they’re ready and waiting. Student loans will be managed far better than before—it’s been a mess,” Trump stated in the Oval Office on Friday.

Trump stated that the transition of student loan management would take place “immediately” but did not provide a specific timeline. 

In addition to the SBA overseeing student loans, he announced that the Health and Human Services Department would take on certain student-related services, another function previously managed by the Department of Education.

“Robert F. Kennedy Jr. will be in charge of special needs programs, nutrition initiatives, and everything else—it’s quite complex,” Trump stated. 

Earlier in the week, he criticized the Department of Education for its “breathtaking failures” and pledged to redirect its funding back to individual states.

In the U.S., states already oversee most aspects of education, including curriculum development. The majority of American children attend public schools, which are free and operated by state and local authorities. 

However, the federal Department of Education managed loan programs that assisted students in covering university tuition costs. 

These changes come as the Trump administration pushes to reduce government spending, shutting down agencies and cutting staff.

On Friday, the SBA announced plans to reduce its workforce by more than 40%. 

According to officials, the cuts are expected to save the agency over $435 million annually by the next fiscal year.