The Fired Student-Debt Relievers
Like many employees of Ed and the F.S.A., Gittleman had her critiques of the system. “A society should not be forcing people into an untenable financial situation in order to get ahead,” she said. The Ombudsman Group was necessary because loan servicers, and Ed itself, got things wrong, and because for-profit institutions sometimes misled their students. (Ed recently settled a class-action lawsuit alleging that the department failed to discharge debts for more than half a million students who were defrauded by their schools.) In a better world, Gittleman said, there would be “free or affordable community college and vocational programs, or greater funding to public universities.” In the real world, just last month Ed told the loan servicers contracted by the F.S.A. to freeze applications for income-driven repayment plans, which peg monthly amounts to household earnings and promise eventual forgiveness—leaving only the most expensive repayment options. (The applications were reopened last week, in response to a lawsuit.)
On March 20th, Trump signed an executive order calling for the complete “closure” of Ed. (Elon Musk tweeted a crudely Photoshopped meme of Trump posing in front of a tomb labelled “Departmen of Education.”) The order specifically addressed the functions of the F.S.A. “The Federal student aid program is roughly the size of one of the Nation’s largest banks, Wells Fargo,” it said. “But although Wells Fargo has more than 200,000 employees, the Department of Education has fewer than 1,500 in its Office of Federal Student Aid.” To DOGE, this could almost come off as a compliment. Gittleman did not see it that way. “We have a lot of operational requirements and subject-matter expertise that a traditional bank doesn’t,” she told me.
The following day, Trump announced that the F.S.A. would be relocated to the Small Business Administration, which manages around four hundred and sixty billion dollars in mostly private loans. (Moving the F.S.A. and closing Ed would require acts of Congress; meanwhile, the S.B.A., which McMahon ran during the first Trump Administration, is being cut in half.) The experts I spoke with inside and outside Ed believe that the goal is to fully privatize student loans. “What they’re trying to do is build a new market for Wall Street,” Mike Pierce, of the Student Borrower Protection Center, told me.
Reporting on the F.S.A. has brought back memories of my own student-debt story. My parents didn’t have much experience with the higher-ed system, or much money. They did know the names of standardized tests and fancy schools, and pushed me toward them. Don’t worry about the cost, they said. We filled out the FAFSA. I took out federal student loans. My parents took out Parent PLUS loans, at a high rate of interest. Then my younger brother went to college. Again: FAFSA, student loans, Parent PLUS loans. After college, I deferred payment while I lived abroad and then went to law school—paid for again with borrowed money, this time from private banks. The interest mounted. At some point, I consolidated my student loans, which exceeded two hundred thousand dollars. It took ten years, and a generous public-service repayment plan, to zero out the balance.
The cost of collecting on a debt can be greater than the amount owed. Private debt collectors buy debt in bulk, for cents on the dollar, knowing that they’ll lose out on a certain percentage of the total. Ed has used a similar logic to determine which loans simply aren’t worth pursuing. During the pandemic, the first Trump Administration paused all repayments, and the Biden Administration made fixes to public-service loan forgiveness and expanded options for income-driven repayment. More than five million borrowers had loans forgiven. Republican attorneys general sued to stop some of these reforms, and won. The Heritage Foundation’s Project 2025 recommended the abandonment of income-driven repayment and loan forgiveness, and an embrace of private lending: the S.B.A. model. In a separate paper, the plan’s education expert blamed “massive and unnecessary education subsidies” for the drop in America’s fertility rate.
Criticism of the student-loan system isn’t confined to the right. A debtors’ movement that grew out of Occupy Wall Street has pushed for free public college. Better to spend up front, in covered tuition, than on loans that often don’t get repaid. But consumer advocates who have criticized, even sued, Ed for violating borrowers’ rights are now filing lawsuits to save the agency. In one such case, Tammy Sabens, a sixty-four-year-old Kentuckian with more than fifty-one thousand dollars in outstanding educational debt (double her principal), attested to the “anxiety” and “panic attacks” caused by her inability to apply for income-driven repayment.
In another case, a university administrator explained the cascading effects of “current reductions in staff at F.S.A.” The acting Under-Secretary of Education had promised that “no employees working on core functions” of FAFSA or student-loan servicing had been affected by the reduction in force. But the FAFSA portal was clearly glitchy. As a result, students did not know which grants and loans they qualified for “until well past notification of their acceptance” to colleges. Poor students were missing out on opportunities, and schools were having to push back their deadlines.
Here’s what Gittleman said in her declaration to a federal court:
“I’ll be doing something at home, and a case will pop up in my head,” Gittleman told me last week. “I had dozens of borrowers who were trying to get on income-driven repayment programs. I’d been working on one case for two years.” She was proud of having helped a public librarian who’d had to declare bankruptcy “become debt-free.” She had received a family Christmas card from a borrower with a debilitating illness. It’s unclear what will happen to the three-hundred-plus complaints that Gittleman had been working on. “I never got to transition my cases,” she told me. “My e-mail was actually shut off before I got fired.” ♦
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An earlier version of this article misstated when Gittleman was fired.