The Trump administration’s rush to spin off the Education Department’s student loan office has thrown the agency into chaos, with one official involved in the planning dismissing the effort as “basically just a cartoon,” The Washington Sun reported Thursday.
Current and former officials told The Sun the department is taking a chaotic approach that is setting the overhaul up for failure.
“They think they’re just going to do it,” the official said. “Their plan is basically just a cartoon.”
According to three sources and internal documents reviewed by The Sun, the administration plans to separate the Federal Student Aid office into an independent agency by Oct. 1, 2027. The change would affect 45 million borrowers and the department’s $1.6 trillion loan portfolio.
The official said FSA “does not know how to be independent,” because it leans so heavily on the broader department to function.
Federal law requires FSA to remain within the Education Department, and the department has acknowledged internally that the change would require an act of Congress. Yet according to The Sun, the department hasn’t engaged Capitol Hill or discussed the plan with the Treasury Department, which pays out the loans.
The rush has left some staff questioning their role.
“There’s a difference between doing your job and colluding with someone to destroy your own agency,” a current official told The Sun.
FSA chief operating officer Richard Lucas, who is leading the effort with the White House budget office, told staff about the change in late September and declined to take questions, according to a person briefed on the matter. The office has already lost 43% of its staff since Trump took office, part of a broader push that has gutted the department Trump and Education Secretary Linda McMahon have vowed to eliminate.
The idea of spinning off FSA into its own agency appeared in Project 2025, the conservative policy blueprint.
Melanie Storey, a former FSA official who now leads the National Association of Student Financial Aid Administrators, was dubious about the timeline.
“October of 2027, I mean come on,” she said.
Meanwhile, Sen. Tammy Baldwin (D-WI) called the effort “just another illegal move” to destroy the department “because they thought it sounded good on a bumper sticker.”
Education Department spokesperson Ellen Keast called the story “fake news” but declined to specify what was wrong, saying the department is working to restore FSA “as a performance-based organization — not a political tool.” The White House budget office called the reporting “inaccurate” but didn't elaborate.
