The Trump administration may be planning to wash its hands off the trillion dollar-plus student loan debt. Trump administration officials are exploring options to sell off parts of the federal government’s $1.6 trillion student loan portfolio to the private market, according to three people familiar with the matter.
“The Trump administration is committed to analyzing all aspects of the federal student loan portfolio,” a senior administration official told Politico. “Unlike the previous administration, we are focused on ensuring the long-term health of the portfolio for the benefit of both students and taxpayers.”
Eileen Connor, executive director of the Project on Predatory Student Lending, which has frequently sued the Education Department on behalf of borrowers, said she’s skeptical the administration could strike a deal that benefits both taxpayers and borrowers.
READ: Almost 10 million US students are behind on their student loan payments (March 27, 2025)
“The only way for it to make economic sense is to structure the deal in a way that really short-changes borrowers,” she said. Much of the value of the federal government’s student debt, she said, comes from powers that private entities don’t enjoy: unlimited time to collect on loans, the ability to garnish Social Security benefits and tax refunds, and broad immunity from lawsuits if the government mishandles borrowers’ debt.
The discussions have taken place among senior Education Department and Treasury Department officials and have focused on selling high-performing portions of the government’s massive portfolio of student debt, which is owed by about 45 million Americans.
As of late 2025, student loan debt in the United States totals approximately $1.8 trillion, making it one of the largest sources of personal debt in the country. About $1.66 trillion of this is federal student loans, held by over 42 million borrowers. The average federal student loan debt per borrower is around $39,000, with many private loans adding to the financial burden.
The age group 35-49 carries the largest share of this debt, totaling roughly $570 billion, while borrowers over 50 increasingly face serious repayment challenges. Delinquency rates have risen sharply, reaching over 8% in early 2025, reflecting growing difficulty in loan repayment. The current administration has resumed student loan forgiveness programs under Income-Based Repayment, aiming to alleviate some pressure on borrowers.
Additionally, there are discussions about selling portions of the federal student loan portfolio to private investors, which could significantly impact loan management and repayment.
Rising delinquency rates highlight repayment challenges faced by many borrowers. The resumption of loan forgiveness programs offers some relief, but the potential sale of federal loans introduces uncertainty around future repayment terms and protections.