Your Student Loans and the Treasury Department: What Is Moving, What Is Not, and What to Do Now

If you have heard that your student loans are "moving to the Treasury Department," you are not alone in wondering what that means for your monthly bill. The short answer is that most families will not notice a change right away. The longer answer has a few pieces worth knowing, especially if a loan in your family is in default. This guide explains what the Education Department (ED) and Treasury agreed to, what is still unknown, and the simple steps that protect you no matter how the changes unfold.

What Did ED and Treasury Actually Agree To?

On March 19, 2026, ED and the U.S. Treasury Department announced a "Federal Student Assistance Partnership." It is an interagency agreement, which means two parts of the federal government agreed to share work. It is not a law passed by Congress, and ED says it keeps overall responsibility for the student aid portfolio.

Under the agreement, Treasury takes operational responsibility for collecting defaulted federal student loans first. Later phases could cover other parts of the system, "as permitted by law." The announcement did not set firm dates for those later phases.

The Three Phases in Plain Language

Based on the agreement and news coverage, the plan has three steps:

• Phase one: defaulted loans. Treasury runs collections on loans that are in default. This includes the office that handled defaulted loans at ED, according to Inside Higher Ed.
• Phase two: servicing of loans that are not in default. Treasury would take over some of the day-to-day work of billing and customer service, "to the extent practicable." No timeline has been announced.
• Phase three: aid rules and the FAFSA. Treasury would review who is eligible for aid and how schools are checked. The announcement mentioned the FAFSA, but it described no specific changes to the form.

Phase one is the only one that is underway. As of this writing, the later phases are plans, not changes you can see.

What Stays the Same for Most Borrowers

If your loans are in good standing, officials have said borrowers "should see no change." That means:

• You keep paying your current loan servicer.
• Your loan terms, interest rate, and repayment plan do not change because of this agreement.
• Programs like Public Service Loan Forgiveness (PSLF) and income-driven repayment are governed by law and rules, not by this agreement.
• You do not need to sign anything or move your account.

Changes to your plan this year come from a different source: the repayment rules that took effect July 1, 2026. If you are sorting out which plan you are on, our guide to the paper repayment plan form is a good place to start.

What Changes If Your Loan Is in Default

This is where the partnership touches real families. ED reported about 7.8 million borrowers and $179 billion in default as of the end of 2025. Other reports, including Inside Higher Ed, use a figure closer to 9 million borrowers. Counts differ by source and date, so treat any single number as a snapshot.

For borrowers in default, collections now run through Treasury. Treasury already had power to collect through tax refund offsets and benefit offsets. Wage garnishment of up to 15 percent of disposable pay can happen without a court order. On September 30, ED and Treasury also opened a Defaulted Loans Support Center to help borrowers get out of default. We explain the options in our post on the new Defaulted Loans Support Center and what to do if wage garnishment is coming.

Ways out of default

The main paths are loan rehabilitation, which requires nine on-time payments within ten months, and consolidation into a new loan. Consolidating borrowers are limited to the Repayment Assistance Plan (RAP) or the Tiered Standard plan. Both paths can stop collections, but the details matter, so start at the official default page on StudentAid.gov.

Why Some People Are Worried

Advocates have raised a few concerns, and they are worth knowing about even if you are not in default:

• Legal questions. Critics argue ED may not have the authority to hand these jobs to another agency without Congress. Only Congress can close ED. We did not find a final resolution of those disagreements.
• Handoff mistakes. Whenever loans change hands, records can get lost and bills can be wrong. That is already a worry this fall, as shown by the false default notices MOHELA sent to some borrowers.
• Capacity. Advocates have asked whether the agencies are ready to take on millions of accounts while also processing repayment plan changes.

None of this means something will go wrong for your family. It means keeping good records is smart.

Watch Out for Scams

Big announcements about "new loan managers" are exactly when scam calls and texts increase. Keep these rules in mind:

• Your servicer and StudentAid.gov will never ask you to pay a fee to enroll in a federal plan.
• Do not give your FSA ID (your StudentAid.gov login) to anyone, even someone who says they work for Treasury.
• If someone pressures you to pay today, hang up and call the number on your servicer's website or your latest statement.
• Use only addresses that end in .gov for official loan information.

A Simple Checklist for Any Family

You can do these steps in about an hour, and they help whatever happens next:

1. Log in to StudentAid.gov and confirm your loan servicer, balance, and repayment plan.
2. Check that your email, phone number, and mailing address are current with your servicer. Missed notices are a common reason people end up behind.
3. Save or screenshot your payment history and plan details. Our guide on building a student loan paper trail shows what to keep.
4. Keep paying on time. If a payment is hard, contact your servicer about a lower-payment plan before you miss one.
5. If a loan is already in default, start with the Defaulted Loans Support Center rather than waiting for a letter.

Questions to ask your servicer

If you call or message your servicer, these questions get you useful answers:

• Which repayment plan am I on right now, and when is my next recertification date?
• Is my payment history complete, and can you send it to me in writing?
• Is any part of my account being handled by a different company or agency?
• If I am behind, what is the lowest payment option available to me today?
• How will I be told in writing if my account is transferred?

What About the FAFSA?

Students and parents filling out the 2027-28 FAFSA do not need to do anything differently because of this partnership. The form is open, and filing early still helps, especially for state grants that can run out. You can file the FAFSA at StudentAid.gov and use our filing checklist to gather documents. Treasury's possible role in the FAFSA is a later phase with no dates attached.

Why This Matters When You Pick a College

Loan rules are changing fast, and that makes the amount you borrow more important, not less. Borrowing less keeps your family flexible no matter which agency runs the system. A free CollegeLens plan helps you compare net cost across schools and see how much borrowing a school would require.

Create your free CollegeLens plan to see what your options may cost.

Questions Families Are Asking

Will my loan servicer change because of the Treasury agreement?

Not right now. ED has said borrowers should keep working with their current servicer. If a change comes later, you should receive official notice, and you can confirm it at StudentAid.gov.

Do I need to do anything to keep PSLF or my repayment plan?

No action is needed because of this agreement. Keep certifying employment for PSLF and following your plan's yearly steps as usual.

Who do I contact if my loan is in default?

Start with the Defaulted Loans Support Center on StudentAid.gov. It explains rehabilitation and consolidation, and it is run by ED and Treasury.

The Bottom Line

For most families, the Treasury partnership is background news today. For anyone with a defaulted loan, it is a reason to act sooner. Keep your contact details current, save your records, and use only official .gov sites for help. We will keep watching for updates on the later phases and share them here.

-- Sravani at CollegeLens