SBA to cut half its workforce - all while taking on student loan management

The student loan portfolio totals more than $1.6 trillion – the same size as some of the largest banks in the U.S.

The Small Business Administration has announced it is cutting half its workforce, triggering concern as the agency is also taking over the enormous student loan program.

The agency is reducing the workforce by 43 percent, eliminating 2,700 jobs, in cuts enforced by Elon Musk’s Department of Efficiency, the agency’s head Kelly Loeffler said.

Separately, as part of the administration’s push to eliminate the Department of Education, President Donald Trump announced on the same day that student loans would be handled by the SBA.

The student loan portfolio totals more than $1.6 trillion – the same size as some of the largest banks in the U.S.

No further details about how moving such a massive portfolio to the depleted agency have been revealed. Education Secretary Linda McMahon told Fox News she was working with the agency on a strategic plan.

Loeffler said the agency is “prepared to work with Congress and the Administration to bring accountability back to America’s student loan program,” in a Friday X post.

President Donald Trump announced the Small Business Administration would be taking over management of the student loan portfolio on the same day the agency announced sweeping job cuts (REUTERS)

A senior official at Federal Student Aid told Inside Higher Ed that the office was “blindsided” by the announcement. According to the official, the plan had been to shuttle the student loans to the Treasury Department - that was until Trump’s announcement.

Critics said dismantling the Department of Education threatened “chaos” for the 40 million student loan borrowers in the U.S.

The president cannot eliminate the Department of Education, or transfer control over the federal student aid program to a different agency, without approval from Congress, the National Consumer Law Center noted.

​​“Tens of millions of students and families rely on the functioning of federal student aid programs to pay for college and job training programs and to manage their federal student loans,” Abby Shafroth, the center’s co-director of advocacy said in a statement. “Dismantling the Department of Education will make things much worse, creating new disruptions and costly and frustrating problems for students, borrowers, and their families in every state,” Shafroth added.

The Student Debt Crisis Center called the administration’s dismantling of the department an “unprecedented attack” on the rights of millions of families and students and said it added “confusion and hardship” to borrowers.

“This dangerous move puts the future of borrowers at risk by dismantling the very agency tasked with holding loan servicers accountable,” the center’s president Natalia Abrams said. “Without the Department of Education, borrowers will be left without recourse, vulnerable to exploitation, and cut off from any meaningful path to relief.”