Partnership for Public Service statement on proposed spinoff of Federal Student Loan Office

WASHINGTON – The nonpartisan, nonprofit Partnership for Public Service today released the following statement from President and CEO Max Stier in response to reports that the Trump administration is planning to remove the Federal Student Aid office from the Department of Education and establish a new independent agency by October 2027.

“Federal law places the Federal Student Aid office within the Department of Education, and only Congress can change that. Yet according to published reports, neither Congress nor the Treasury Department, which disburses federal student aid, have been consulted. Congress’ consent is required before this kind of reorganization takes place, not after a decision has already been made.”

“Restructuring an agency doesn’t guarantee better results. Rather, successful reform depends on having the right people, funding and systems in place to deliver high-quality services. When the U.S Department of Agriculture relocated two offices in 2019, most staff left the agency rather than move, the average employee’s tenure was cut roughly in half and grant payments were delayed.”

“Last year, the Partnership’s Public Service Viewpoint Survey showed that only 18.3% of Department of Education staff were satisfied with their jobs. On top of that, the FSA alone has lost 43% of its staff since January 2025, and the department’s transfer of loan servicing to Treasury remains incomplete. Now, 800 employees are being asked to build a separate agency in 12 months without congressional approval or a clear strategy for success. The consequences will be felt by 42.6 million borrowers across the country.”

“If the administration believes student aid should be run differently, it should make that case to Congress and invest in what actually improves service: expert staff, modern technology, and customer experience and digital delivery teams. Congress should demand answers about the costs, benefits and accountability for this reorganization before more taxpayer dollars are spent or employees are forced to relocate. The law requires it and the American people deserve a transparent government.”

The Partnership for Public Service is a nonpartisan, nonprofit organization dedicated to building a better government and a stronger democracy.

Over the past 25 years and across five presidential administrations, we have offered government agencies and leaders crucial training and insights to better serve the public, championed legislation for effective government and shined a spotlight on the achievements of the federal workforce.

Now, building on our decades of experience, we engage the public about the value of government and how its erosion harms us all and advance reforms that seek to make our federal institutions more effective, responsive and accountable to the American people. We also strengthen leadership in federal, state and local government, help federal workers navigate an increasingly complex federal environment and provide former public servants with opportunities to shape efforts to transform government.

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