The Education Department announced a phased transfer of operational responsibility for the federal student‑loan portfolio to the U.S. Treasury, beginning with defaulted loans. The agreement directs Treasury to assume collections for roughly $180 billion in defaulted debt and positions the agency to take on broader servicing duties later "to the extent practicable," officials said. The move follows data showing a record number of borrowers in delinquency and default and comes as the administration argues Treasury can bring financial discipline to a $1.7 trillion program it says has been mismanaged. Consumer advocates and legal groups warned the transfer could add new hurdles for borrowers and worsen collection practices. Treasury Secretary Scott Bessent and Education officials framed the shift as an operational overhaul but stopped short of confirming full legislative plans to dismantle the Education Department. For campuses and financial‑aid officers, the change raises immediate operational questions: which agency handles default outreach, how servicers will be overseen, and whether borrower protections or repayment processes will change. Institutions that rely on federal loan servicing and verification systems should expect months of transition and heightened compliance scrutiny.