An American flag and a U.S. Department of Education flag fly outside the US Department of Education building in Washington, D.C., U.S., Feb. 1, 2025.
Annabelle Gordon | Reuters
Federal student loan borrowers experiencing difficulties with their loans could find they have no recourse as President Donald Trump’s cuts to staff at the Department of Education are carried out, employees at the agency said.
Staffers at the Education Department tasked with fielding complaints from federal student loan holders and resolving their issues were let go in the recent job cuts, one employee told CNBC. At least eight of the fired staffers were working on a total of nearly 800 student loan borrower complaint cases, an employee said.
The remaining staff will likely have to take over these accounts. But, the employee said, “I have no idea when they’ll get reassigned.”
As a result, those borrowers “just have to continue to wait, and maybe they go into delinquency,” the staffer said.
Hundreds of thousands of people submit complaints to the Office of the Ombudsman at Federal Student Aid each year, according to a rough calculation by higher education expert Mark Kantrowitz.
Trump is expected to sign an executive order calling on Education Secretary Linda McMahon to abolish the agency, a move that experts say would worsen the situation for borrowers. The Wall Street Journal first reported on that expected order.
As a department authorized by Congress, the department cannot be eliminated without congressional approval. But in the meantime, the Trump administration can slowly starve it by cutting resources.
There are roughly 42 million Americans who hold federal student loans, and the outstanding debt exceeds $1.6 trillion. Currently, around 9.2 million people — or roughly 43% of the nearly 22 million borrowers with payments due — are behind on their payments, according to a recent VantageScore report.
Federal student loan borrowers need assistance now more than ever, the Education Department staffers said. Collection activity is resuming for the first time in roughly five years after the expiration of pandemic-era relief, and a new repayment plan, called SAVE, that millions had enrolled in is now blocked by the courts.
“People will start having their wages or benefits garnished,” the staffer said. “If this happens erroneously, it would be extremely difficult to resolve that on your own.”
“Borrowers would be stuck having their money seized without a way to stop it,” they said.
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Borrowers who reach out the Education Department with questions or complaints are now less likely to get assistance, the staffers told CNBC.
Sources for this story requested anonymity because they feared retribution if they were named.
A White House spokesperson did not respond to questions from CNBC about the slowdown in student loan borrower assistance at the Education Department.
The in-house team dedicated to helping borrowers with complaints concerning the Public Service Loan Forgiveness program no longer exists, a staffer said.
As a result, remaining employees are unsure of where to direct borrowers who have issues with this program, the employee said. (PSLF is a popular way for public servants and those who work at nonprofits to get their debt canceled after 10 years of payments.)
“We lost that expertise and the ability to answer complaints in a timely manner,” the employee said.
Staffers say borrowers are already feeling the effect.
One employee told CNBC that they are currently helping a woman get her student debt discharged because of her disability, and that “every time we talk she’s terrified I won’t be there the next time.”
The employees said their work in complaint resolution has had huge impacts on people’s financial lives, and those efforts are now at risk.
They said they were able to get loans discharged for victims of identity theft, teachers and countless disabled borrowers.
Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center, criticized the moves at the Education Department.
“The ombudsman team was one of the first places to raise the alarm when there were systemic problems,” Yu said.
“The student loan system is broken, and right now there’s nowhere for borrowers to turn.”