On the Legal Consequences of Disbanding the U.S. Department of Education with Respect to Federal Student Loan Obligations

Abstract:

 This opinion examines the legal implications of disbanding the U.S. Department of Education with specific focus on the collectability of outstanding federal student loan debt. It argues that in the absence of the Department of Education—the statutory administrator of Title IV loan programs—the federal government lacks legal authority to enforce such obligations. Moreover, this opinion contends that such debts cannot be transferred to or enforced by other federal agencies without explicit congressional authorization. This position is grounded in statutory construction, separation of powers doctrine, and administrative law principles.

I. Introduction

The hypothetical—but increasingly debated—prospect of disbanding the U.S. Department of Education raises a host of unresolved legal questions. Chief among them is whether outstanding federal student loan debt remains enforceable in the absence of the Department, and whether such obligations can be lawfully transferred to another federal agency for administration or collection.

This letter presents the opinion that:

Federal student loan obligations are legally inseverable from the Department of Education's statutory existence, and

Absent specific legislative action, the transfer of such debts to another department violates the nondelegation and separation of powers doctrines.

II. Statutory Framework: Authority Is Department-Specific

Federal student loans originate under Title IV of the Higher Education Act of 1965 (HEA), codified at 20 U.S.C. § 1070 et seq. These statutes delegate loan administration, servicing, and enforcement functions exclusively to the Secretary of Education. Indeed, the Secretary is the only federal officer expressly authorized to:

Enter into loan contracts (20 U.S.C. § 1087a);

Service, consolidate, and discharge loans (20 U.S.C. § 1087e);

Collect outstanding balances (20 U.S.C. §§ 1080a, 1082(a)(6)).

Notably, the statutory scheme does not authorize any other department or agency to perform these functions in the absence of the Secretary. Accordingly, when the Department is disbanded, so too is the legal authority for the collection of student loan debt, unless and until Congress reassigns such powers via new legislation.

III. Non-Transferability of Debt Collection Authority

Some have proposed that in the event of the Department’s dissolution, collection functions could be reassigned to another agency (e.g., Department of the Treasury) via executive reorganization or interagency memorandum. This proposition is legally untenable.

Administrative authority cannot be transferred between departments without statutory basis. The U.S. Supreme Court has consistently held that core agency powers may not be reassigned absent clear and specific legislative authorization. In FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000), the Court emphasized that major administrative functions must be rooted in “clear congressional intent.” Similarly, in Utility Air Regulatory Group v. EPA, 573 U.S. 302 (2014), the Court reaffirmed that administrative agencies “must always ground their actions in the statute.”

The loan obligations at issue were created through contracts governed by statutory terms that explicitly name the Department of Education and the Secretary as parties to the agreement. As such, there is no legal or contractual mechanism to substitute another agency without breaching the underlying statutory and contractual frameworks.

IV. Constitutional Concerns: Separation of Powers and the Nondelegation Doctrine

Allowing the Executive Branch to transfer debt collection authority without new legislative approval invites serious constitutional objections. The nondelegation doctrine bars Congress from giving the Executive unchecked discretion to reassign core legislative functions without intelligible principles. See J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394 (1928); Gundy v. United States, 588 U.S. ___ (2019).

More broadly, collection of public debt implicates Congress's Article I powers over federal spending, taxation, and the credit of the United States. The enforcement of federal loan obligations—especially those exceeding $1 trillion—is not a “mere administrative act” but a major policy function reserved to the legislative branch.

To permit the Executive to assign this authority unilaterally, particularly in the wake of dissolving a major cabinet department, would violate foundational principles of constitutional governance.

V. Conclusion

In conclusion, it is the opinion of this author that:

The federal government lacks the legal authority to collect outstanding student loan debt once the Department of Education is disbanded, absent new congressional authorization; and

Such debt may not be lawfully transferred to another federal agency through executive action or interdepartmental memorandum.

The continued enforceability of federal student loan obligations is therefore legally contingent on the active statutory existence of the Department of Education and its Secretary. Without them, the legal foundation for collection collapses, and new legislation would be required to preserve or reassign those powers.