The U.S. Treasury will assume operational responsibility for collecting defaulted federal student loans as part of a phased transfer from the Education Department, officials announced this week. The move begins with roughly $180–$200 billion in defaulted debt and is framed by the administration as an operational cleanup of a troubled portfolio. Treasury Secretary Scott Bessent and Education officials described the shift as a three‑phase plan that could eventually place most of the $1.7 trillion portfolio under Treasury oversight. Borrower advocates and consumer groups immediately criticized the plan, warning it risks harsher collections and greater disruption for vulnerable borrowers. Legal and consumer‑rights groups including the National Consumer Law Center said operational handoffs of servicing and default collections create potential errors and serious borrower harms if systems or oversight are not fully redesigned. Congressional scrutiny and implementation details are likely to dictate how quickly and broadly Treasury’s role expands. Higher‑education leaders and policy analysts say the change could reshape how student debt is administered and how colleges interact with federal loan systems — from default prevention to borrower communications. Institutions that advise or counsel students face new uncertainty about who handles defaults and where appeals and borrower assistance will be directed.