The Department of Government Efficiency led by Elon Musk plan on continuing job cuts throughout the federal government. While this certainly will save money for the government, staff at the Department of Education are starting to worry. Federal student loan borrowers aren’t sure they will have any recourse, or source of help.
Department of Education Employees Unsure of Future
Staffers at the Department of Education in charge of complaints from those in student loans were let go as a result of the recent job cuts. Those cut represented about 800 student loan borrower complaint cases, and the current staff will have to take on extra work. As a result, the student loan process as a whole will likely slow down. One employee said “I have no idea when they’ll get reassigned.” The same employee said that borrowers will “just have to continue to wait, and maybe they go into delinquency.”
While borrowers and employees alike aren’t confident in the future, matters may get worse in the future. Trump is expected to sign an order calling Linda McMahon, Education Secretary, to abolish the Department of Education. For borrowers, that certainly would make the financial situation much worse. The Department of Education, however, is one authorized by Congress. That means that in order to be abolished, Congress must approve of the order. Some are unsure whether or not Congress would do so. Critics of Trump claim that if the department was still intact, the President would decrease funding to it.
Impact on Borrowers
Currently there are about 42 million Americans in student debt totaling about $1.6 trillion. 22 million have payments due, and 9.2 million people are behind on their payments. This huge need stresses individuals in the Department of Education more, as there is plenty of work to be done. One employee said “people will start having their wages or benefits garnished… If this happens erroneously, it would be extremely difficult to resolve that on your own.” The employee also said “borrowers would be stuck having their money seized without a way to stop it.”
Persis Yu, deputy executive director at Student Borrower Protection Center, is not a fan of the current situation, calling the student loan system “broken.” It’s safe to say that the federal government will save some money by cutting these jobs, but it seems that borrowers are bearing the cost that comes with that. If you’re looking for financial education or investment guidance, be sure to continuing reading on Due.com to learn strategies to reach financial goals and become debt-free.
Featured Image Credit: Tim Gouw; Pexels: Thank You!
