Dozens of Democratic lawmakers in the US House and Senate warned Monday that the Trump administration’s reported push to sell off the federal government’s massive student portfolio to the private market would be disastrous for borrowers and a “lucrative giveaway” to predatory corporations.
The lawmakers, led by Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) in the Senate and Rep. Ayanna Pressley (D-Mass.) in the House, pointed with alarm to recent reports indicating that Treasury and Education Department officials have met repeatedly with finance industry executives for the purpose of valuing the federal government’s student loan portfolio, which is believed to be worth around $1.7 trillion.
“By selling parts of the federal student loan portfolio, the Trump administration may seek to unlawfully strip borrowers of their legally guaranteed protections,” the lawmakers wrote in a letter to Education Secretary Linda McMahon and Treasury Secretary Scott Bessent. “As experts have explained, private investors’ ‘interest would likely be to squeeze as much profit from the repayment as they could.’ Those profits would likely come at the expense of the borrower via fewer protections and less generous benefits.”
Politico reported last month that the Trump administration is considering selling at least part of the federal government’s student loan portfolio to private companies.
Though small relative to the federal portfolio, the private student loan market has an “outsized” impact on borrowers, the advocacy group Protect Borrowers explained earlier this year.
“While private student loans account for roughly 8% of all student loan debt, more than 40% of student-loan-related complaints submitted to the Consumer Financial Protection Bureau (CFPB) are about private loans,” the group said. “Of these private student loan complaints, roughly one-third are from borrowers who are struggling and can’t afford their monthly payment. This is because, unlike federal student loans, private loans lack critical safeguards for students and parents.”
In their letter to McMahon and Bessent, the Democratic lawmakers demanded that the Trump administration “immediately cease any efforts to privatize the federal student loan portfolio,” arguing that “this sale would be a giveaway to wealthy insiders at the expense of working-class borrowers and taxpayers.”
Warren echoed that sentiment in a statement, saying, “Any way you spin it, this sale would be a massive giveaway to giant companies.”
“It’d be a tremendous mistake,” the senator added.
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