Treasury Department Takes Over Student Loan Collections From Dept Of Education

The Department of Education and the U.S. Treasury Department announced a new interagency agreement on March 19, 2026, that will shift operational control of defaulted federal student loan collections from Education to Treasury. This comes as nearly 7.7 million student loan borrowers holding $180 billion in student loans are in default.

The move, which the administration has branded the “Federal Student Assistance Partnership,” marks a big step forward in dismantling the Education Department in what officials described as the equivalent of the “fifth-largest commercial bank in the United States.”

Under the agreement, Treasury will immediately take over collecting on defaulted student loan debt, using private collection agencies to help borrowers in default enroll in rehabilitation programs or return to good standing.

Treasury will also absorb the operations of FSA’s Default Resolution Group, which manages the Default Management and Collections System (DMCS). In future phases, Treasury would expand to managing non-defaulted loans and potentially other FSA functions, including FAFSA administration.

It's important to realize that Treasury already played a large role in collections, but this is now administrative control of the bigger program.