The Donald Trump government may soon sell part of the federal student loan portfolio to the private market — with a focus on ‘high-performing’ segments. Federal loans make up a majority of student debt in the US and currently stands at roughly $1.67 trillion. There are more than 42 million borrowers across the country who owe government or private student loan balances. The discussions also come mere months after the POTUS introduced sweeping reforms through the One Big Beautiful Bill Act. The Department of Education also resumed student loan collections in 2025 following a lengthy pause.
$1.6 trillion student loan portfolio
According to a Politico report, discussions have taken place among senior Department of Education and Treasury officials about a possible sale. Multiple sources told the publication that the Trump administration had also spoken to ‘finance industry executives’— including potential buyers. The talks had initially involved DOGE officials before being led by ‘senior political appointees’. The plans have reportedly advanced to include the possibility of an outside consulting firm or bank being brought in to analyse the various loan programs and ‘assess how the private market would value parts of the portfolio’.
The Trump administration has not officially confirmed the possibility and it remains unclear just how far such talks may have progressed. The POTUS had also explored a similar idea during his first term — with the Department of Education hiring consulting firms to examine the student loan portfolio and price some of the loans for a sale. Analysis had shown at the time that the portfolio was worth far less than government projections. Efforts had also stalled as the COVID-19 pandemic hit in late 2019.
What does sale to the private market mean?
Some student loans that are currently managed by federal agencies could be transferred to private financial firms if the Trump government finalises a sale plan. This could also remove or alter federal safeguards such as income-based repayment plans and loan forgiveness for affected borrowers. They could also face new repayment terms or stricter collection practices and potentially lose access to some legal protections. The change can affect any segment of the $1.6 trillion loan portfolio currently with the Department of Education — with no clear update available at this time.