March 21 (UPI) — President Donald Trump on Friday said federal student loans will be moved from the Department of Health to the Small Business Administration though the agency workforce will be cut 43%.
Also as part of Trump’s plan to eliminate the Department of Education, programs for students with special needs and nutrition matters will be handed by the Department of Health and Human Services.
“I think that will work out very well. Those two elements will be taken out of the Department of Education,” Trump told reporters in the Oval Office.
On Thursday, he signed an executive order to wind down operations in the Department of Education though Congress must sign off on it.
He said Title I funding that boosts money to schools serving high-poverty populations, individuals with Disabilities Education Act funding and student aid would still be administered by the department under the order.
The Trump administration wants to abolish any programs not in the federal statute and move congressionally mandated requirements to other federal agencies or to the states,
“I’ve decided that the SBA, the Small Business Administration, headed by Kelly Loeffler, will handle will all of the student loan portfolio,” Trump told reporters in the Oval Office, saying it is a “pretty complicated deal, and that’s coming out of the Department of Education immediately.
“Bobby Kennedy, with the Health and Human Services Department, will be handling special needs and all the nutrition programs and everything else,” he continued.
The Education Department is the smallest federal agency with only 4,245 employees before the workforce was cut in half last month.
The $268 billion appropriations in the department last year represented 4% of the federal budget.
Schools have been forced to comply with the Trump administration’s demands to halt diversity, equity and inclusion programs, which have been challenged in court. In addition, employees, like in other agencies, have been terminated or applied for a buyout.
Student loans are one of the largest programs the Education Department handles.
In 2024, student loan debt backed by the federal goverment was $1.777 trillion and held by 42.7 million borrowers, according to the Education Data Initiative.
“They are all set for it; they are waiting for it,” Trump told reporters about SBA taking over the loan administration. “It’ll be serviced much better than it has in the past.”
The Education Department was created in 1979 under the Jimmy Carter administration as a result of a spinoff from the Department of Health, Education and Welfare, which also resulted in the Department of Health and Human Services.
SBA workforce reduction
Like the Education Department, the Trump administration is downsizing agencies through Elon Musk’s Department of Government Efficiency.
The SBA said in a statement it will cut the workforce by more then two-fifths, “ending the expansive social policy agenda of the prior Administration, eliminating non-essential roles, and returning to pre-pandemic staffing levels.”
The cuts would save more than $435 million a year by next fiscal year.
The 2,700 reductions would be accomplished via voluntary resignations, expiration of COVID-era and other term appointments, and a limited number of reductions in force.
The agency has 6,500 workers, or less than half-percent of the entire federal workforce.
“The strategic reorganization will begin a turnaround for the agency by restoring the efficiency of the first Trump Administration, as well as its focus on promoting small businesses,” the agency said. “Core services to the public, including the agency’s loan guarantee and disaster assistance programs, as well as its field and veteran operations, will not be impacted.”
Former Sen. Kelly Loeffler of Georgia posted a video on X on Friday that it’s time to “rightsize the agency.”
“Since the pandemic, the SBA has doubled its workforce, expanding in size, scope and spending with miserable results,” Loeffler said in the video. “That’s why change is coming to the SBA. … This agency is done wasting millions of tax dollars to fund a progressive pandemic-era bureaucracy. We will not allow fiscal mismanagement to threaten our loan programs or criminals to get away with fraud. But we will evaluate every program and expenditure and we will rightsize the agency to transform the SBA into a high-efficiency engine for America’s entrepreneurs and taxpayers.”
The SBA’s headquarters are in Washington, D.C., but it has a large workforce in Texas.
The agency was created by Congress in 1953.
It provides loans to businesses that fall victim to natural disasters and offers support on international trade issues. That included loans to small businesses and nonprofit groups during the COVID-19 pandemic.