Federal student-loan servicing and oversight are facing disruption after a major government restructuring hit the Office of Federal Student Aid (FSA). A watchdog report found large portions of FSA staff managing the $1.7 trillion portfolio were fired or left in the wake of DOGE cuts, with multiple suboffices left without remaining employees. The operational fallout arrives as new borrowing limits take effect July 1 under the administration’s student-loan changes, including caps tied to degree types. In parallel, federal courts are weighing legal challenges to how the Department of Education defines “professional” graduate degrees for loan eligibility. Two rulings underscore the instability: Judge Beryl Howell blocked parts of the “professional” degree definition and issued orders tied to the underlying statutory framework used for the caps. The fight is likely to continue as loan eligibility rules are tested through litigation.