AAUW Condemns Department of Education Plan to Transfer Defaulted Student Loan Portfolio to Treasury

Move signals abandonment of borrowers and threatens women’s economic security

Washington, D.C. — The American Association of University Women (AAUW) strongly condemns the U.S. Department of Education’s announcement that it will transfer management of defaulted federal student loans to the U.S. Department of the Treasury — a move that prioritizes debt collection over borrower protection and signals a dangerous step toward dismantling the federal student loan system.

Statement from Gloria L. Blackwell, AAUW CEO:

Moving defaulted student loans to the Treasury is the wrong approach. Student loan debt is not just a ledger entry — it reflects people’s decision to pursue education, build knowledge, and create economic opportunity for themselves, their families, and their communities. We have long understood that supporting students is an investment in America’s future.  

The Department of Education exists to help students access that opportunity and manage federal student aid with students — not dollars — at the center. Shifting these loans to an agency built for revenue collection fundamentally betrays that mission. Instead of helping people get back on track, this move opens the door to wage garnishment, tax refund seizure, and fees that push people deeper into financial instability.

Women hold the majority of the nation’s student debt and are more likely to face repayment challenges because of the gender pay gap, caregiving responsibilities, and structural inequities in the labor market. Black women, in particular, carry higher and more persistent debt burdens.

AAUW warns policies that prioritize collection over support will disproportionately intensify hardship for people already in default, erode borrower protections and paths back to repayment, and create more instability in an already stressed student loan system. The greatest harm will fall on women, especially women of color.

This move also reflects a broader effort to diminish the Department of Education’s role in managing federal student aid, threatening access to higher education, and weakening one of the most important drivers of women’s economic opportunity. For AAUW, that is unacceptable.

AAUW calls on Congress and the Administration to reverse this decision and instead focus on strengthening borrower protections, improving repayment systems, and ensuring that federal student aid programs work for the people they are meant to serve.

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AAUW (American Association of University Women) is one of the nation’s leading organizations for equity in higher education and women’s economic empowerment. Founded in 1881 by women who defied society’s conventions by earning college degrees, AAUW has since worked to increase women’s access, opportunity, and equity in higher education through research, advocacy, and philanthropy of over $146 million, supporting thousands of women scholars. Learn more at aauw.org.