Written By: Julia Copperwheat
President Donald Trump recently signed an Executive Order aimed at dismantling the United States Department of Education, a move that has sparked widespread debate about its legal feasibility and potential consequences for federal student loans.
The Executive Order and Its Immediate Impact
The Executive Order, titled “Improving Education Outcomes by Empowering Parents, States, and Communities,” signed on March 20, 2025, sets the stage for transferring the Department of Education’s responsibilities to other federal and state entities. The department currently oversees a $1.6 trillion federal student loan portfolio, serving nearly 43 million borrowers. If dismantled, its functions—including loan servicing, income-driven repayment plans, and forgiveness programs—would need to be reassigned. Potential candidates to take over these responsibilities include the Treasury Department and the Small Business Administration (SBA) based on their existing involvement with Americans’ income data.
What are Executive Orders?
Executive Orders are directives issued by the President to either promote or prevent a course of action from a federal official or administrative agency. While not explicitly mentioned in the Constitution, their authority is generally derived from Article II, which vests executive power in the President and mandates that they “take Care that the Laws be faithfully executed.” This clause provides the constitutional basis for executive orders, allowing the President to guide the implementation of federal laws.
However, executive orders are not without limits. They must align with existing laws and cannot create new laws or override congressional statutes. Congress can invalidate an Executive Order by passing legislation, although the President can veto the legislation. If this occurs, Congress can override the veto with a 2/3rds majority vote.
Separately, federal courts, through judicial review, have constitutional authority to stay enforcement or invalidate Executive Orders that are beyond the scope of the President’s authority.
Can the Department really be dismantled with just an Executive Order?
Dismantling the Department of Education requires more than an executive order. The department was established by Congress in 1979, and its closure would necessitate new legislation to repeal the enabling statute. Further, the President cannot unilaterally move the Federal Student Aid program’s management to another agency. Only Congress can authorize which department manages the student loan program, since Congress is vested with the “power of the purse” through Article I of the Constitution, which is the power to determine how to spend public monies. This legislative hurdle is significant, as it requires bipartisan support in a politically divided Congress.
In the meantime, however, the President can take actions to cause significant disruptions to the agency without outright abolishing it, as has been seen with USAID. For example, the Department of Education is already facing orders to fire nearly half of their staff and narrow their focus in research and civil rights.
How does the Order affect my student loans?
First, it is recommended that students log into their servicer websites to download all their student loan historical records and servicer agreements. During a servicing transition, it may be difficult to access your records.
Second, one potential outcome is that the federal student loan program’s management gets heavily transitioned to private lenders. Because this would make the decision to grant loans in the hands of a private entity rather than the federal government, this could lessen protections against discrimination and reduce the number of students who receive student loans. Private institutions generally have more leeway than public institutions regarding discrimination.
Should I continue to make loan payments?
As the Trump administration moves forward with its plan, the fate of the Department of Education remains uncertain. However, one thing remains certain; the federal government is not interested in forgiving all federal student loan debt through this move. Although you may encounter delays and confusion in paying or receiving your loans, your outstanding debt is not going anywhere under this Order.
Because this situation is still developing and no definitive changes have been made to the federal student loan program yet, borrowers are advised to stay informed and maintain communication with their loan servicers as the situation evolves.
Sources:
Abigail A. Graber, Executive Orders: An Introduction, Lib. of Congress (Mar. 29, 2021), https://www.congress.gov/crs-product/R46738.
American Bar Association, General FAQs on Executive Orders, (Nov. 28, 2021), https://www.americanbar.org/groups/public_education/resources/teacher_portal/educational_resources/executive_orders/.
Exec. Order No. 14242, 90 Fed. Reg. 13679 (Mar. 20, 2025).
Kamaron McNair, Yes, You Still Have To Pay Your Student Loans, CNBC (Feb. 21, 2025, 11:40 AM), https://www.cnbc.com/2025/02/21/what-happens-to-student-loans-if-department-of-education-is-eliminated.html.
Rita R. Zota, A Snapshot of Federal Student Loan Debt, Lib. of Congress, (Feb. 19, 2025), https://www.congress.gov/crs-product/IF10158.
Ron Lieber, What Happens to Student Loans if the Education Dept. Closes?, N.Y. Times (Mar. 20, 2025), https://www.nytimes.com/2025/03/20/business/student-loans-education-department.html.