STATEMENT from PPSL on Trump Administration's Plan to Spin Off Federal Student Aid
Proposed restructuring raises legal concerns and threatens further harm to millions of student loan borrowers
BOSTON (October 16, 2026) – According to new reporting, the Trump administration is developing plans to separate Federal Student Aid (FSA) from the U.S. Department of Education and establish it as an independent agency responsible for managing the federal student loan portfolio as part of its ongoing effort to dismantle the Department. The Project on Predatory Student Lending (PPSL), the leading nonprofit legal organization representing borrowers defrauded by predatory colleges, issued the following statement.
PPSL previously published an in-depth analysis of the $1.6 trillion portfolio, examining the legal and financial barriers to a potential sale and the implications for student loan borrowers.
Statement from Eileen Connor, President and Executive Director of the Project on Predatory Student Lending:
“The Trump administration seems determined to rid itself of responsibility for the $1.6 trillion federal student loan portfolio, regardless of whether it is legal, realistic, or in the best interests of borrowers. First, it floated the idea of selling off the portfolio, despite enormous legal and financial obstacles. Now, it wants to spin off Federal Student Aid into an independent agency, something it cannot do without an act of Congress.
This is yet another distraction from the Department of Education’s continued failure to responsibly manage the loans of millions of Americans. Borrowers and their families have spent years paying the price for a Department of Education that refuses to follow the law or fulfill its most basic obligations to the people whose loans it holds. Further destabilizing an already broken system will only compound those harms. Rather than take responsibility for fixing this broken system, the administration is concocting increasingly reckless schemes that will leave borrowers and their families to suffer the consequences.”
About the Project on Predatory Student Lending
The Project on Predatory Student Lending (PPSL) is the leading legal organization representing student borrowers against predatory for-profit colleges and the policies that enable institutions to exploit and cheat students. PPSL uses bold, strategic litigation and advocacy to demand accountability in the higher education space and influence policy solutions to create a more just and affordable education system.
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