Treasury Takes Over $180 Billion in Defaulted Student Loans as Portfolio Hits $1.7 Trillion
The U.S. Department of Education and Treasury announced a partnership in April 2026 to transfer management of the federal student loan portfolio to the Treasury Department. The initial phase covers roughly $180 billion owed by 9.2 million borrowers in default, with future phases expanding Treasury's role to non-defaulted loans.
The U.S. Department of Education and the Department of the Treasury announced a partnership to transfer management of the federal student loan portfolio to the Treasury Department.
The federal student loan portfolio totals nearly $1.7 trillion. Fewer than 40% of borrowers are in repayment, and almost 25% are in default. The initial phase of the transfer covers the collection of defaulted loans, totaling roughly $180 billion owed by 9.2 million borrowers.
Future phases will expand the Treasury's role to non-defaulted loans and FAFSA administration. The transition affects more than 42 million federal student loan borrowers.
Borrowers in default face potential wage garnishment and seizure of federal tax refunds and Social Security benefits. Involuntary collections on defaulted loans are currently on hold, but the shift to Treasury could affect the timeline for their restart. Borrowers seeking counseling or rehabilitation programs may also face delays as the Default Resolution Group moves to the Treasury.
The announcement came during Financial Literacy Month, which the U.S. Senate designated as April. Experts emphasized that financial knowledge is a critical life skill, enabling individuals to make confident and purposeful decisions.
Separately, mortgage rates rose again in April 2026. The average 30-year fixed-rate mortgage reached 6.22% by March 19, up from 6.11% the prior week. The increase followed mixed economic data and geopolitical tensions affecting the bond market. The Federal Reserve held rates steady, with markets pricing in more than a 70% chance of no change through December.
Gas prices also climbed sharply. The national average for regular gasoline hit $3.98 on March 24, a nearly 35% rise from $2.95 a month prior. The surge was driven by a spike in crude oil prices caused by conflict in the Middle East and disruption of tanker traffic through the Strait of Hormuz. The International Energy Agency agreed to release 400 million barrels of oil from emergency reserves in response.
