If Trump Sells Student Loan Portfolio, Avenues of Debt Cancellation Could Close

Trump administration officials are once again exploring the possibility of selling portions of the federal government’s $1.6 trillion student loan portfolio, held by about 45 million borrowers, according to recent reporting by Politico.

Federal law dictates that such a sale cannot cost taxpayers any money. But, as Eileen Connor, executive director of the Project on Predatory Student Lending, told Politico, executing a deal that benefits both taxpayers and borrowers is nearly impossible. The federal government enjoys extraordinary powers of collection that private lenders do not — such as garnishing tax refunds, disability benefits, and Social Security payments. Absent those collection methods, private lenders make money through higher interest rates and longer repayment plans.

Mike Pierce, executive director of Protect Borrowers, puts it bluntly: “President Trump and Secretary [Linda] McMahon are hell-bent on squeezing every last dollar out of families with debt.” Daniel Zibel of the National Student Legal Defense Network adds that such a sale could foreclose any future possibilities for debt cancellation. In short: privatization means less protection, more suffering, and fewer paths to relief.

“President Trump and Secretary McMahon are hell-bent on squeezing every last dollar out of families with debt.”

While selling off the federal loan portfolio would be unprecedented, it fits a broader Trump project: shrinking the government’s role in public life, especially education. In March, the president announced his intention, via executive order, to dissolve the Department of Education — a move his education secretary called the department’s “final mission.”

That dissolution is already underway. In October, the administration drastically reduced staff in the office responsible for managing $15 billion in special education funding, undermining services for the nation’s 7.5 million children with disabilities. And the department’s reach extends far beyond special education: It administers $18.4 billion in funding for low-income students and billions more for career and technical education, teacher development, and multilingual learners. It also manages the student loans that make college possible for millions of students, between 30 percent and 40 percent of undergraduates each year.

Trump’s gutting of the department will trickle down from colleges to high schools to elementary schools. As one of Secretary McMahon’s appointees said in April, with stunning candor: “We’re going to have a lot of empty school buildings.”

Like the threat to privatize the government’s debt portfolio, these abdications of responsibility are part of a larger vision for the country, one in which the government has retreated from its role in caring for, among other people, kids. Trump is selling a world of unused classrooms and teeming prisons, where the wealthiest among us have access to healthy food and doctors and homes — and the poorest among us will have nowhere to live and nothing to eat and no longer receive the services they need to learn how to read.

When I think of what’s lost, I imagine the first classroom I taught in, in the South Bronx: the worn couch where students curled up with books, the quiet murmur as they learned to sound out words —gen-er-os-i-ty, sor-row, free-dom. I think of an immigrant student from Ecuador who read a poem about a winter fox stepping from its den. If these classrooms close, where will those children go?

Trump’s “Big Beautiful Bill” extends his vision upward, too. It threatens graduate education for lower- and middle-income students, makes loan repayment more expensive, shrinks loan forgiveness programs, and, by extension, discourages the very professions we most need — nurses, teachers, social workers. The future he offers is one without education and one without care.

If allowed to purchase this portfolio, the Debt Collective would free millions of people from the shackles of debt.

The Debt Collective — the nation’s first debtors’ union, of which I’m a member — offers a different vision. When the Trump administration sought private buyers for the loan portfolio, the Debt Collective raised its hand. “Debt Collective has purchased billions in unpayable household debts over the last decade, including student loan debt,” said Braxton Brewington, spokesperson for the Debt Collective.

If allowed to purchase this portfolio, the Debt Collective would continue that work on a historic scale, freeing millions of people from the shackles of debt. Imagine what that freedom could unlock: families able to afford dental care, have children, pay for chemotherapy, or become educators themselves. Imagine a country where care isn’t privatized but shared — where freedom means the capacity to thrive together.

Trump’s administration is selling a world of isolation and scarcity. The Debt Collective is offering something else: a world built on care and interdependence.

“If the Trump administration is serious about selling portions of its federally held student loan debt to potential buyers, then they should know the Debt Collective is willing and able to make a sizable purchase. The nearly $2 trillion portfolio sitting on the federal government’s books will never be repaid and the market knows it,” said Brewington. “Sell it to us.”