On Thursday, ED announced a new Interagency Agreement (IAA) with the U.S. Department of Treasury (Treasury). Under the agreement, Treasury will assume responsibility for the collection of defaulted federal student loans, and over time, provide “operational support” to ED on the collection of all federal student loan debt.

This is the 10th IAA ED has brokered with other federal agencies—including the U.S. Department of Labor, HHS, and State—to offload its federal program management responsibilities since the start of President Trump’s second term.

You may remember that last March, President Trump suggested that oversight of federal student loans would be shifted to the Small Business Administration. While ED highlighted Treasury’s capabilities to manage financial and information technology systems and its experience collecting delinquent and defaulted debt for federal agencies, Secretary McMahon did not specify why Treasury was determined to be a better fit than SBA.

What are the terms of the IAA?

The IAA will have a phased implementation:

  • In the first phase, Treasury will take over the federal government’s collection on defaulted federal student loan debt, using private default resolution agencies to facilitate borrowers’ loan rehabilitation and return to good standing.
  • In the second phase, Treasury will be expected to take on a more active role in the federal student loan program, including operational support for collecting on all federal student loans (not just defaulted loans).
  • Treasury will also pursue opportunities to support the functions of the Federal Student Aid Office, including administration of the FAFSA. Treasury already plays a key data-sharing role that supports the calculation of federal student aid.

Importantly: Federal law mandates that ED continue to carry out its responsibilities over student loan policy development and the administration of the FAFSA and the National Student Loan Data System. However, ED is also winding down its responsibilities to the “maximum extent appropriate and permitted by law,” as ordered by President Trump on this day last year.

This article is sourced from Whiteboard Notes, our weekly newsletter of the latest education policy and industry news read by thousands of education leaders, investors, grantmakers, and entrepreneurs. Subscribe here.