An American flag and a US education department flag fly outside the US Department of Education Department in Washington, DC, SH.BA, February 1, 2025.
Annabelle Gordon | Reuters
Federal student loan borrowers who suffer difficulties with their loans can find out that they have no recourse as President Donald Trump’s cuts for staff in the education department are made, employees told the agency.
Employees in the Department of Education in charge of field complaints by federal student loan holders and resolving their issues were left in the last job cuts, told a CNBC employee. At least eight of the fired employees were working for a total of about 800 cases of student loan borrower complaints, one employee said.
The remaining staff are likely to have to take over these accounts. But the employee said, “I have no idea when they will be re -designated.”
As a result, those borrowers “just have to continue to wait, and maybe they go into delinquency,” the staff said.
Hundreds of thousands of people file complaints to the Ombudsperson Office in federal student aid annually, according to a approximate calculation by Mark Kantrowitz Higher Education Expert.
Trump is expected to sign an executive order calling on Education Secretary Linda McMahon to abolish the agency, an action that experts say would exacerbate the situation for borrowers. Wall Street Journal reported for the first time on that expected order.
As a department authorized by Congress, the department cannot be eliminated without the approval of the Congress. But in the meantime, the Trump administration can die slowly by cutting the resources.
There are approximately 42 million Americans owed by federal student loans, and outstanding debt exceeds $ 1.6 trillion. Currently, about 9.2 million people – 43% of nearly 22 million borrowers with compulsory pay – are behind their payments, according to a recent VantaGescore report.
Federal student loan borrowers need help now more than ever, said Education Department employees. The meeting is resuming for the first time in approximately five years after the expiration of the ease of the Pandemia era, and a new repayment plan called Save, which millions were registered in now blocked by courts.
“People will start their salaries or benefits to decorate,” staff said. “If this happens incorrectly, it would be extremely difficult to solve it yourself.”
“The borrowers would have stuck by grasping their money without a way to stop it,” they said.
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Borrowers who reach the education department with questions or complaints are now less likely to receive help, told CNBC staff.
Resources for this story demanded anonymity because they were afraid of punishment if they were to be named.
A White House spokesman did not answer CNBC questions to slow down the help of student loan borrower in the Education Department.
The internal team dedicated to helping borrowers with the Public Service Boaning Program no longer exists, one staff said. As a result, the remaining employees are not sure where to direct borrowers who have problems with the program, the employee said. (PSLF is a popular way for public servants and those who work in nonprofits to cancel their debt after 10 years of payment.)
“We lost that expertise and the ability to respond to complaints in a timely manner,” the employee said.
Employees say borrowers are already feeling the effect.
One employee told CNBC that they are currently helping a woman her student debt to be dismissed because of her inability, and that “whenever we speak she is terrified I won’t be there next time.”
Employees said their work on resolving complaints has had major impacts on people’s financial life, and those efforts are now at risk.
They said they were able to borrow for the victims of identity theft, myriad teachers and borrowers with disabilities.
Persis Yu, Deputy Executive Director and Managing Advisor at the Student Borrower’s Defense Center, criticized the movements in the Department of Education.
“The Ombudsman team was one of the first places to raise the alarm when there were systemic problems,” Yu said.
“The student loan system has been broken, and now there is nowhere to return the borrowers.”