Washington gutted the office that manages your student loans. Next week, it has to reinvent them

Next week, how Americans fund higher education will change forever. On July 1, sweeping changes to student loan borrowing will take effect, setting lifetime caps on previously unlimited loans and limiting the options for repayment. But, on March 11, 2025, Federal Student Aid (FSA), the office that manages student loans, was gutted by DOGE cuts, and problems have embroiled borrowers since. Student loan borrowers have reported issues with repaying their loans, including incorrectly receiving monthly payment bills as low as $50, when their actual payments were thousands of dollars. Other borrowers can’t access the Pay As You Earn repayment plan that should still be available to them, even as the Trump administration cut that option for new borrowers, CNBC reported. That plan allows people to pay 10% of their discretionary income, whereas other plans could lead to higher payments. In 2026, nearly one in six American adults had federal student loan debt. The average federal student loan debt is $39,075, according to the Education Data Initiative. For master’s graduates, the average jumps to $81,870, and the average doctoral graduate has $180,757 in student debt. A new report from the Education Department’s Office of Inspector General, an independent entity within the department that completes audits and identifies fraud, found that 40% of the staff that manages the $1.7 trillion student-loan portfolio were fired or left for other reasons. Of Federal Student Aid’s 136 suboffices, nearly a quarter have no remaining employees, according to the report. The report also found that the DOGE cuts affected significant suboffices of FSA that manage lending institutions and risk assessment, leaving them with no employees. The report analyses how the office’s workforce was immediately affected by DOGE cuts during the first quarter of 2025. The suboffices that work with the schools that accept federal loans, track default rates, and colleges’ median earnings, were also left with no s