Student loan impacts if the Education Department shuttered

Trump said this month that his administration was looking to task the Treasury Department, Commerce Department or the Small Business Administration with federal student loan management.

Experts say the most logical agency would be the Treasury Department, since it already plays a role in collecting past-due debts from Americans through the Treasury Offset Program.

Meanwhile, “Neither Commerce nor SBA has any relevant experience,” higher education expert Mark Kantrowitz told CNBC this month.

The change could not come at a worse time for federal student loan borrowers, consumer advocates say. Court rulings have nixed Biden administration attempts at widespread forgiveness and repayment plans with lower payments, leaving many borrowers confused and saddled with higher costs.

Without the Education Department operating at full capacity, borrowers may now find their applications for existing loan forgiveness programs stalled, Kantrowitz said. Federal student loan borrowers can be eligible for debt cancellation under income-driven repayment plans or if they become disabled, among other reasons.

Student loan servicers handle the paperwork for the relief, but it’s the Education Department that “has final approval of all student loan forgiveness,” Kantrowitz said.

“This may be disrupted by the transition of the student loans to a new federal agency,” he added.

One important thing to keep in mind: The terms and conditions of your federal student loans cannot change even if the agency overseeing them does, experts say. Borrowers’ rights were guaranteed when they signed the master promissory note when their loans were originated.

The White House did not immediately respond to a request for comment.

What worries do you have about your federal student loans with the Education Dept. at risk? If you’re willing to share your experience for an upcoming story, please email annie.nova@nbcuni.com.