Sen. Elizabeth Warren, D-Mass., is trying to stop the selloff of the $1.6 trillion student loan portfolio to private companies, demanding that Education Secretary Linda McMahon and Treasury Secretary Scott Bessent drop their alleged talks about a possible sale.
“We urge you to immediately cease any efforts to privatize the federal student loan portfolio,” Warren wrote in a bicameral letter to the secretaries. “Let’s be clear: This sale would be a giveaway to the wealthy at the expense of working-class borrowers and taxpayers,” the letter says, adding: “It threatens the loss of legally guaranteed borrower protections, and the sale would likely be illegal if the debt is sold at a loss to taxpayers.”
The letter, signed by more than 40 Democratic lawmakers, was led by Warren, independent Vermont Sen. Bernie Sanders and Massachusetts Democratic Rep. Ayanna Pressley. It argues that a sale would strip borrowers of protection from predatory lenders and create financial losses for taxpayers, which in turn would benefit private businesses and harm individual borrowers and their families. By altering the student loans of more than 40 million Americans, Warren claims the Trump administration is threatening an “extra punch in the gut” for families.
“Any way you look at it, this sale would be a huge giveaway to giant companies at the expense of taxpayers and student loan borrowers,” Warren wrote in a statement first obtained by ABC News, adding that “it would be a tremendous mistake.”
Senator Elizabeth Warren speaks to reporters after a vote on Capitol Hill on November 9, 2025 in Washington, DC.
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Politico first reported on discussions about a possible sale to the private market last month. McMahon has not suggested that private companies get parts of the student loan portfolio, which is housed in the agency’s Office of Federal Student Aid (FSA), but he did confirm that he is considering the Treasury Department as a possible landing spot.
In a fireside chat at the Cato Institute last summer, McMahon said the Treasury Department could be better equipped to handle the money.
“I really think a natural area for student loans to reside is the Treasury Department,” McMahon said, adding that “Secretary Bessent and I have had conversations about that.”
ABC News has not independently confirmed reported conversations between top officials at the Department of Education and the Treasury about privatizing student loans and hiring a private consulting firm to assess the value of the debt portfolio and prepare the loans for sale, Politico reported.
In response to an inquiry from ABC News, Ellen Keast, press secretary for higher education at the Department of Education, said: “We are evaluating ways to improve the fiscal health of the nearly $1.7 trillion student loan portfolio to safeguard the interests of both students and taxpayers.”
Still, Ayanna Pressley, Warren’s colleague in Massachusetts, said it is “dangerous and unacceptable” for the administration to work with so-called predatory companies. “We call on the Trump administration to immediately step back, support borrowers, and put people before profits,” Pressley wrote in a statement to ABC News.
Warren launched her Save Our Schools campaign in April to investigate the administration’s attempts to shut down the Department of Education, including reducing the size of the FSA and making changes to the student loan system. Most recently, the Department’s office watchdog launched an investigation into the agency’s confidential student loan data after Warren and a group of Democrats called for an investigation into the Department of Government Efficiency’s alleged “infiltration” of the FSA.
Although no agreement has been signed yet, the Department is exploring “additional partnerships” with federal agencies to help McMahon move statutory functions, such as special education services, to other agencies and be out of a job. McMahon’s education department has already taken steps to transfer some of its non-statutory functions, including starting a workforce development partnership with the Department of Labor and moving a program dedicated to educating the next generation of farmers to the Department of Agriculture.
Former Department of Education employees denounced a possible liquidation of student loans and emphasized that it is a non-serious and unsuccessful measure that the first Trump administration attempted in 2019. James Kvaal, who worked in senior positions in the Obama and Biden administrations, told ABC News that his higher education portfolio under former President Barack Obama included moving some student loan functions to the Treasury Department before the pilot was abandoned.
Treasury Secretary Scott Bessent speaks alongside Donald Trump during a press conference in the Oval Office of the White House on September 5, 2025 in Washington, DC.
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“Treasury had its own debt collection authority and wanted to see if they could do a better job with student loans than the Department of Education,” Kvaal said.
“The answer was no, they ended up having higher costs and raising fewer dollars for the Treasury,” he added.
Melissa Byrne, founder of We The 45 Million, which advocates for student debt cancellation for all Americans, said a potential liquidation creates a “nightmare” scenario for borrowers.
According to Byrne, the move to private companies does not create a smoother and more efficient payment process for borrowers or guarantee their protection.
“What they’re going to do is make things worse by not only making the service worse, but also eliminating all the incentives,” Byrne told ABC News. “If you’re selling the loan to the private sector, the private sector won’t see the borrower as a consumer they have to answer to,” he said.
“Who will be responsible [for the loans]”?” he added. “It will be the borrower and their families who will be lost in all of this.”
