Under an interagency agreement announced Thursday, the U.S. Treasury will assume operational responsibility for roughly $180 billion in federal student loans now in default — the first phase of a planned transfer of the government’s $1.7 trillion portfolio away from the Education Department. Treasury Secretary Scott Bessent and Education officials framed the move as a step to impose financial discipline and improve collections. The deal sets out phased responsibilities: Treasury starts with defaulted loans, may later assume servicing for non‑defaulted loans, and could ultimately run FAFSA operations. Administration officials say borrowers need do nothing now; advocates warn the transfer raises legal and logistical risks and could confuse borrowers during servicing transitions. The shift is a major element of the administration’s broader campaign to shrink and reallocate Education Department functions and could prompt legal challenges over statutory authority and borrower protections.