The Small Business Administration (SBA) has announced a sweeping reduction of its workforce, cutting 2,700 jobs—nearly 43% of its staff. This comes as the agency embarks on the monumental task of managing the federal student loan portfolio, valued at more than $1.6 trillion.
With 40 million borrowers relying on these loans, the SBA’s new responsibilities have triggered widespread concerns about the future of the U.S. student loan program.
The announcement, made under the direction of SBA Administrator Kelly Loeffler, aligns with the broader administration’s push to streamline federal agencies.
Critics, however, have raised alarm over how these significant workforce cuts will affect the agency’s ability to manage a portfolio of this size and complexity.
SBA’s Drastic Job Cuts Raise Concerns Over Agency’s Capacity
The decision to reduce SBA’s workforce by 43% is part of an efficiency drive championed by the current administration. According to Loeffler, this restructuring aims to create a more streamlined, efficient agency.
However, the scale of the cuts has raised questions about the agency’s capacity to handle its expanded role. With thousands of positions eliminated, the SBA will now be responsible for the management of a $1.6 trillion student loan portfolio, a task previously under the purview of the Department of Education.
Kelly Loeffler has reassured the public, stating that the SBA is “prepared to work with Congress and the Administration to bring accountability back to America’s student loan program.” But the agency’s readiness to take on such a significant responsibility remains uncertain, especially when factoring in its reduced staff numbers.
According to Education Secretary Linda McMahon, the administration is currently collaborating with the SBA to draft a strategic plan for the transition.
The Shift of Student Loan Management to the SBA
President Donald Trump’s decision to transfer the student loan program to the SBA, announced on the same day as the workforce cuts, has left many educators and policymakers surprised.
According to sources within the Federal Student Aid office, the original plan was for the Treasury Department to take over the loan program.
The unexpected shift has sparked concerns about disruptions to the student loan system, with critics arguing that dismantling the Department of Education could result in chaos for borrowers.
Advocacy groups, such as the National Consumer Law Center, warn that dismantling the Department of Education would make it more difficult for students and families to navigate the complexities of federal student aid.
The Student Debt Crisis Center has also voiced concerns, calling the move an “unprecedented attack” on the rights of millions of borrowers.
