Federal Student Loan and Education Programs Shift

The Departments of Labor and Treasury are taking over key programs as the Education Department streamlines operations.

Updated on Oct. 24, 2026 in Administration

Federal Student Loan and Education Programs Shift

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The U.S. Department of Education has transferred key operational functions to the Departments of Labor and Treasury through interagency agreements. These shifts include management of career training and federal student loan operations as part of an effort to streamline federal bureaucracy.

Why it matters

By reassigning these responsibilities, the agency aims to demonstrate that its functions can be absorbed by other departments to reduce costs and federal oversight. This shift is expected to save taxpayers hundreds of millions of dollars by vacating the Lyndon B. Johnson Department of Education building.

The Department of Labor is now managing adult education and literacy programs, while the Treasury Department has taken over student loan operations. This transition coincides with the agency vacating its headquarters in Washington, D.C., and moving operations across departments.

The players

Linda McMahon

As U.S. Education Secretary, she is overseeing the agency's efforts to transfer operational duties and reduce federal bureaucracy.

Department of Education

This federal agency is responsible for national education policy and is currently restructuring its operations to demonstrate reduced necessity.

Department of Labor

This department handles national workforce development and has assumed control over adult education and family literacy programs.

Department of the Treasury

This department manages the nation's finances and is now operating federal student loan and debt collection systems.

Department of Energy

This federal department is set to occupy the former office space vacated by the education agency.

The details

The agency is using interagency agreements to move day-to-day operations to other cabinet-level offices while retaining legal oversight of the programs. Additionally, the Department of Education is allowing states to apply for waivers to gain more flexibility in how they spend federal education dollars. Iowa is currently the first state to move forward with this process to increase local discretion over fund allocation.

July 2025: The Department of Education issued a letter to states regarding federal fund waivers.
August 2026: The Department of Energy began moving into the former education headquarters.
October 2026: The Department of Education finalized the transfer of core functions to Labor and Treasury.

The Home Front

This transition marks a significant shift in the federal administrative landscape, moving away from centralized education oversight toward distributed departmental management. It follows a clear trend of federal restructuring aimed at reducing office-space overhead and streamlining agency operations.

Families with federal student loans should watch for official correspondence regarding potential changes to their loan servicing or collection points of contact. If you live in Iowa, monitor state-level announcements regarding how new federal funding waivers may impact local school resources and literacy programs.

The takeaway

While the administrative reorganization shifts how programs like student loans are managed, individual loan terms remain unchanged. Keep a close watch on future communications from the Treasury Department regarding any new portals or processes for managing your federal student debt.