A panelist on MSNBC expressed alarm Friday over President Donald Trump’s decision to begin dismantling the U.S. Department of Education, arguing that the move could effectively eliminate any remaining chances for student loan forgiveness.
On Thursday, Trump signed an executive order directing Education Secretary Linda McMahon to initiate the process of closing the federal agency — a campaign promise he had championed for years. The administration followed that announcement Friday by stating that student loan management will be transferred to the Small Business Administration (SBA), marking a dramatic shift in federal education policy.
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Speaking on MSNBC’s Alex Witt Reports, political analyst Susan del Percio voiced concern that the transfer could lead to the privatization of student loan debt collection.
“The thing that scares me the most,” del Percio said, “is that the debt from those student loans will probably get privatized already, so it will no longer be the government collecting on the debt. If you privatize it, that means no debt forgiveness.”
She warned that such a move could leave millions of borrowers without recourse and characterized the change as one of the most significant and immediate impacts of the Department of Education’s shutdown.
While critics like del Percio are raising alarms, Trump administration officials have framed the move as part of a broader effort to streamline the federal government and eliminate waste. The decision to hand student loan oversight to the SBA is intended, they argue, to align repayment services with a more efficient and accountable agency already tasked with managing loan programs.
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Press Secretary Karoline Leavitt previously called the Education Department a “bloated bureaucracy” that has cost taxpayers over $3 trillion since its founding in 1979, while failing to improve student outcomes. Trump echoed that sentiment Friday, stating, “Student loans should be treated like other responsible credit programs, not managed by an agency that’s failed America’s students.”
The debate over student loan forgiveness has been a political flashpoint since the COVID-19 pandemic. President Joe Biden’s effort to cancel student debt faced repeated legal challenges. In June 2023, the Supreme Court struck down Biden’s proposed $400 billion debt relief plan in a 6-3 decision, ruling that the administration lacked the authority to unilaterally forgive such large sums without congressional approval.
Despite the ruling, Biden attempted to advance scaled-down versions of the forgiveness plan through alternative legal avenues, including invoking the Higher Education Act and proposing targeted relief for certain borrowers. Those efforts were again blocked by federal courts.
Biden’s original plan, announced in August 2022, sought to cancel up to $10,000 in federal student loan debt for individuals earning less than $125,000 annually — and up to $20,000 for Pell Grant recipients. The Congressional Budget Office estimated that initiative would cost taxpayers roughly $430 billion.
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As Trump’s executive order to dissolve the Education Department advances, education advocates and progressive lawmakers are gearing up for legal and legislative battles over the future of student aid and loan forgiveness.
Del Percio concluded her MSNBC appearance by warning that the administration’s shift could have far-reaching effects beyond student debt. “This is about the government backing away from its commitment to equal educational opportunity,” she said.
Secretary McMahon has stated that no services will be disrupted during the transition, and that student loan servicing under the SBA will focus on “efficiency, accountability, and protection of taxpayer dollars.”
Congressional Democrats are expected to challenge the move in the coming weeks, while state-level education leaders voice concern over the uncertain future of federal education programs and protections.
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