Although the Trump administration has reopened income-driven repayment plans for student loan borrowers, the future of federal financial aid remains very much uncertain. On March 20, US President Donald Trump signed an executive order to begin shutting down the federal Department of Education and turning over management of student loans to the Small Business Administration.
Trump announced that the SBA would “immediately” begin handling the entire federal student loan portfolio, one day after press secretary Karoline Leavitt told reporters that student loans and Pell Grants would still be run out of the Department of Education. Education Secretary Linda McMahon echoed Trump’s sentiments during an interview with CNN on Sunday.
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“[Student loans] would be going to the Small Business Administration,” McMahon said. “There’s not going to be any defunding.”
One critical function of the department is the administration of federal student financial aid like grants and student loans. If the Department of Education is closed, what does that mean for the Free Application for Federal Student Aid, or FAFSA?
Actions by the White House have already weakened the Department of Education — on March 11, agency staffing was slashed by nearly half, and the studentaid.gov website went down for hours.
“These workforce reductions raise serious questions about the future functionality of federal aid programs,” student loan expert Elaine Rubin said in an email. “There has been little communication about how the department plans to sustain efficient operations and prevent disruptions.”
If the SBA takes over administering student loans, it will do so with fewer resources. The agency announced on Friday that it was cutting its workforce by 43%.
If you’re worried about filling out the 2025-26 FAFSA — or have already submitted it — here’s what you need to know.
Is FAFSA going away?
Even if the Department of Education is eliminated, experts do not think federal student aid or FAFSA will disappear.
“The software system and call center are through contractors, but there is still significant work done in-house,” student loan expert Mark Kantrowitz said in an email. “After last year’s FAFSA fiasco, terminating staff could be a disaster.”
Rubin noted FAFSA is the “trigger application” for not only federal financial aid programs but also for many state and institutional aid programs.
“It would be a huge undertaking to replace the FAFSA, but that doesn’t mean that at some point it can’t be,” Rubin said. Because a complex web of programs rely on the application, “we don’t really anticipate the FAFSA going away at this time.”
Where else could FAFSA go?
More than 17 million people completed FAFSA in the 2022-2023 cycle.
Before Trump’s announcement Friday, the most obvious choices for FAFSA’s new home were the Treasury Department or the Internal Revenue Service, since the FAFSA form already connects to the IRS system to upload tax return data.
Kantrowitz initially told that the Treasury Department would be the most likely destination for student loan programs. After Trump’s announcement Friday, Kantrowitz noted that transferring student loans and FAFSA to the Small Business Administration would still require congressional approval.
He added that no matter which agency takes it, the federal government must continue to administer and manage student aid.
“The states are incapable of handling student loans,” Kantrowitz said. “Private lenders lack the capacity and appetite for privatizing the federal student loan portfolio.”
If FAFSA does move, Kantrowitz said, borrowers may not notice much of a difference, depending on who’s running the programs.
“Most functions [of student loan programs] are implemented through contractors,” he said. “SBA lacks experience with managing and collecting student loans. If they transfer the relevant FSA staff and continue to use the existing student loan servicers, the disruption should be minimal. Otherwise, there is the potential for significant chaos and confusion among borrowers.”
Should you still submit FAFSA?
If you need help paying for college, experts say you should continue to use FAFSA. The form is used to determine your eligibility for financial aid, including Pell Grants, scholarships, work-study programs and student loans.
Rubin noted one group of people who have added concerns about completing the FAFSA form: Students who need to report information from a parent or spouse who’s an undocumented immigrant. Applicants who are non-US citizens with qualifying documentation may be eligible for financial aid; the status of financial “contributors” such as parents and spouses doesn’t impact eligibility.
The Privacy Act of 1974 forbids the agency from sharing certain identifying information without written consent or an explicit agreement. Under current agreements, the department shares FAFSA information for applicants — but not contributors — with the Department of Homeland Security to verify an applicant’s status. But this administration’s aggressive stance against undocumented immigrants has many families worried about filing information that could be illegally shared with immigration authorities, Rubin said.
She doesn’t have universal advice for these applicants. “It really has to come down to … what’s best for the family and what they’re comfortable with.”
What to expect if you submitted your FAFSA application
If you’ve already submitted your FAFSA form, the Department of Education says it will process your online application within one to three days (paper form submissions take longer).
After your form is processed, you can log in to StudentAid.gov to see your submission summary and make corrections. However, because of the staffing cuts, you should expect delays if you have any questions or issues with your application, experts warned.
The summary should include your Student Aid Index, which the department sends directly to the schools you listed on your FAFSA form. The schools use your SAI to calculate the amount of financial aid they’ll offer you. If you’re worried your school hasn’t received your information to determine your financial aid package, contact your school’s financial aid office.
