Former President Donald Trump is anticipated to sign an executive order Thursday targeting the dismantling of the U.S. Department of Education, casting uncertainty over the $1.6 trillion federal student loan system.

While Congress alone holds the authority to abolish the department, the Trump administration is taking steps to weaken it by slashing resources. Earlier this month, nearly half of the department’s workforce was let go, reducing staff from 4,133 at the start of Trump’s presidency to just 2,183 now.

What does this spell for over 40 million federal student loan borrowers?

“This would lead to utter confusion,” said Michele Shepard Zampini, senior director at The Institute For College Access & Success.

White House press secretary Karoline Leavitt reassured reporters Thursday that some essential functions, including loan management, would persist within the downsized agency.

However, Trump has hinted that federal loans should be shifted elsewhere. “The Education Department shouldn’t be handling loans — that’s not their job,” he stated earlier.

Possible replacements floated include the Treasury, Commerce, or Small Business Administration. Experts suggest the Treasury Department makes the most sense, as it already oversees debt collections. Others, like Commerce or SBA, lack relevant experience, said higher education analyst Mark Kantrowitz.

Borrower advocates warn that these shakeups come at a terrible time, as many are already reeling from blocked forgiveness programs and rising payments. Delays in processing forgiveness requests could worsen, since final approvals rely on the Education Department.

Importantly, loan terms remain protected under federal law.