Trump's admin confirms that selling federal student loans to private companies is still on the table
Business Insider
February 23, 2026
AI-Generated Deep Dive Summary
The Trump administration has acknowledged for the first time that it is considering selling federal student loans to private companies, though no final decision has been made. The Education Department revealed in a letter to Senator Elizabeth Warren that discussions with stakeholders aim to reform the $1.7 trillion student-loan portfolio and reduce taxpayer burden. While the sale remains uncertain, experts and lawmakers have expressed concerns about transferring loan servicing to private companies, which may limit access to federal protections like repayment plans and forgiveness options.
The potential shift comes as private lenders prepare for an influx of borrowers due to changes in federal repayment policies. Trump's spending legislation introduced new repayment plans and borrowing caps for advanced degrees, prompting major lenders to gear up for more business. However, critics argue that private lenders lack the incentive to offer terms as favorable as federal loans, potentially disadvantaging borrowers.
Warren has strongly opposed the idea, calling it a "ridiculous plan" that would harm working-class families by handing over student-loan servicing to Wall Street. She emphasized that the Trump administration should focus on easing the burden for Americans struggling with student debt rather than prioritizing profit-driven solutions.
The Education Department maintains its commitment to improving federal student aid programs and ensuring borrowers can repay their loans without facing delinquency or default. While the sale of federal student loans remains under consideration, the debate highlights the ongoing tension between reforming the system to benefit taxpayers and addressing the concerns of private lenders preparing for increased business. This issue matters to readers interested in business because it could reshape the financial landscape for millions of borrowers
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Originally published on Business Insider on 2/23/2026