The Trump administration announced an interagency agreement transferring student lending operations from the Department of Education to the Treasury Department, a move officials called the "largest step" yet toward shutting the agency down for good.
Undersecretary of Education Nicholas Kent did not mince words. He told Fox News Digital that "characterizing it as the next and largest step toward winding down the Department of Education is absolutely the right way to think about it." Under the agreement, the Treasury will assume operational responsibility for collecting on defaulted federal student loan debt and provide operational support to the Education Department's efforts to return borrowers to repayment.
The announcement lands at a moment when the legal path has also cleared. The Supreme Court recently lifted a lower-court order that had required the administration to rehire fired Education Department employees, freeing Secretary Linda McMahon to press forward with workforce cuts and the broader reorganization.
Throughout the 2024 campaign, Donald Trump promised to eliminate the Department of Education. He signed an executive order directing his administration to begin disbanding it, and the machinery has been grinding ever since. Kent said the administration has made "historic progress in such a short period of time."
"In over a year, we have reduced the size of the department by over 40%. We have entered into 10 interagency agreements. We have done multiple staff details for other agencies where staff who are in the department are literally physically sitting at other agencies."
Ten interagency agreements. The workforce was slashed nearly in half. Staff were physically relocated to other agencies. These are not talking points. They are operational facts the administration is building into the federal bureaucracy, brick by brick, before asking Congress to make them permanent.
Kent framed the entire effort as a "proof of concept", a way to demonstrate to Congress and to American families that federal grant aid and student loans can keep flowing without the Department of Education standing in the middle. "We want to show moms and dads and families that the Department of Education does not need to be here for federal grant aid and federal student loans to continue flowing to borrowers," he said.
Previous interagency agreements shifted smaller offices and programs to other federal agencies. Andrew Gillen of the Cato Institute explained to Fox News Digital why this one is different. Those earlier moves were "relatively small," he said. Student loans are the core of the department's budget and staffing.
"Whereas this student loan move, this is the biggest staffing and the biggest budgetary component of the Department of Education. So, if it's sent over to Treasury, this really does indicate that this is moving a substantial portion of the Department of Education elsewhere."
The numbers back him up. Total student loan debt stands at nearly $1.7 trillion, according to the department. Less than 40% of borrowers have arranged a repayment plan. Almost 25% are in default. The department's own release blamed the Biden administration's "mismanagement of the Federal student loan portfolio" for the continuing fallout and cost to taxpayers.
Gillen argued the transfer will actually help the people the left claims to care about most. "This will benefit students by streamlining the aid application and student loan repayment processes and save taxpayers money by reducing losses on student loans," he said. And once the move is complete, "Education's biggest budgetary and staffing requirements will be handled elsewhere, which will make it much more feasible to shut down the Department of Education."
That is the strategic logic in plain view. Strip the department of its largest function, prove the work gets done better elsewhere, then go to Congress and ask: why does this agency still exist?
The interagency agreement did not happen in a vacuum. Days earlier, the Supreme Court handed the administration a critical legal win. As National Review reported, the Court temporarily cleared the way for the Trump administration to continue dismantling the department by lifting a lower-court order that had required laid-off employees to be rehired. Trump's March 2025 executive order had directed McMahon to wind down the agency and return authority to the states. A lower court tried to block the layoffs. The Supreme Court said no.
AP News reported the decision split the Court, with the three liberal justices dissenting. Justice Sonia Sotomayor wrote that "when the Executive publicly announces its intent to break the law, and then executes on that promise, it is the Judiciary's duty to check that lawlessness, not expedite it." The majority disagreed.
The ruling allowed the administration to proceed with layoffs of nearly 1,400 employees. McMahon had already overseen cuts affecting roughly half the department's workforce in March. The Washington Times detailed how core functions are being redistributed: student loans to Treasury, some grant programs to the Labor Department, with other responsibilities heading to HHS and Justice.
Trump wrote on Truth Social that the ruling would help return Education Department functions "back to the PEOPLE." McMahon put it more formally.
"Today, the Supreme Court again confirmed the obvious: the President of the United States, as the head of the Executive Branch, has the ultimate authority to make decisions about staffing levels, administrative organization, and day-to-day operations of federal agencies."
Teachers' unions and Democratic officials reacted with alarm. The New York Post reported that the nation's largest teachers' union slammed what it called "unlawful" cuts after the Supreme Court's 6-3 ruling. The underlying lawsuits continue, and critics argue the cuts could undermine congressionally mandated functions.
But the administration's counter is straightforward: the functions aren't being eliminated, they're being moved. Student loans will still be serviced. Grants will still flow. The bureaucracy in between will shrink. McMahon said the department has one "final mission", to turn over its power to the states.
That framing matters. For decades, the left has treated the Department of Education as if it were education itself. Challenge the department, and you must hate children. Cut its staff, and students will suffer. The administration is calling that bluff by transferring the work rather than abandoning it, daring opponents to explain why a standalone bureaucracy must exist when Treasury, Labor, and other agencies can handle the same tasks.
McMahon laid out the broader vision in the department's press release:
"As we partner with these agencies to improve federal programs, we will continue to gather best practices in each state through our 50-state tour, empower local leaders in K-12 education, restore excellence to higher education, and work with Congress to codify these reforms."
That last phrase, "codify these reforms", is the key. Kent said the administration wants Congress to "memorialize these changes in legislation" with "the ultimate goal of closing down the department and putting ourselves out of a job." The interagency agreements are the proof of concept. Legislation is the endgame.
The fight over the Education Department fits a broader pattern. Entrenched institutions resist reform. Courts intervene. The left frames every structural change as an existential crisis. And the administration presses forward anyway, building facts on the ground while the legal and political battles rage.
We've seen similar dynamics play out across the federal government, from Democratic senators calling to defund ICE and impeach cabinet officials to Senate Democrats blocking common-sense amendments on women's sports. The playbook is consistent: oppose every reform, call it unlawful, and hope the courts bail you out. When the courts don't cooperate, as the Supreme Court just demonstrated, the left has no fallback except outrage.
The Education Department fight also echoes the broader tension between what Americans actually want and what Washington insists on preserving. Voters backed a candidate who promised to shut the department down. He won. He signed the executive order. His team is executing the plan. The Supreme Court cleared the legal obstacles. And still the resistance treats the whole thing as illegitimate.
The interagency agreement with Treasury is the biggest domino to fall so far, but Kent made clear it won't be the last. The administration views each agreement as a building block, proof that the department's functions survive without the department itself. The 50-state tour McMahon referenced is designed to gather state-level best practices and build political support for the final legislative push.
The legal fight isn't over. The underlying lawsuits challenging the layoffs and reorganization continue. The Supreme Court's ruling was temporary, and the liberal justices made their displeasure clear. But the administration now has momentum, a functioning model, and a Supreme Court majority willing to let the executive branch manage its own agencies.
Nearly $1.7 trillion in student loan debt. Almost a quarter of borrowers in default. Less than 40% even bothering to set up a repayment plan. The Biden administration's stewardship of this portfolio was, by the current department's own account, a disaster. Handing the collection and servicing work to Treasury, an agency that already knows how to manage money, is not radical. It's common sense dressed up as a bureaucratic reorganization.
When a federal agency's own leadership says its goal is to "put ourselves out of a job," taxpayers should take them at their word, and cheer them on.
