Potential Title IV Disruption Catastrophic (Glen McGhee)

Impact of Department of Education Dismantlement on Higher Education Act Programs

On March 20, 2025, President Trump signed an executive order to begin dismantling the Department of Education, a move that threatens to create significant upheaval across higher education's federal support system. While the order cannot immediately eliminate the department without congressional approval, it has already resulted in substantial workforce reductions and signals major changes ahead for the administration of federal education programs 1.

Title IV: The Most Vulnerable and Consequential Program

Among all eight titles of the Higher Education Act (HEA), Title IV federal student aid programs would create the most severe upheaval for the higher education sector if destabilized through the Department of Education's dismantling. Title IV represents the foundation of federal financial support for higher education, administering approximately $111.6 billion in financial assistance to 9.8 million students in FY202211. This massive program encompasses Pell Grants, federal student loans, and work-study opportunities that directly enable student access and persistence.

Financial Impact Scale

The sheer financial magnitude of Title IV makes its disruption particularly consequential. In 2021 alone, 10.5 million students received $125 billion in federal student aid through the Department of Education15. Title IV's Office of Federal Student Aid received the largest departmental budget allocation - over $68 billion, with $20 billion promised for distribution during 20254. This represents the largest financial relationship between the federal government and higher education institutions.

Enrollment Consequences Already Evident

Even small disruptions to Title IV administration have already demonstrated severe enrollment impacts. Recent problems with the Free Application for Federal Student Aid (FAFSA) system implementation led to measurable enrollment declines:

• 43% of private institutions reported smaller freshman classes
• 27% noted fewer financial aid recipients
• 18% reported decreased racial or ethnic diversity in incoming students2

These enrollment impacts disproportionately affect disadvantaged student populations. The FAFSA completion rates dropped nearly 10%, showing how administrative dysfunction can directly reduce educational access2.

Complex Regulatory Framework

Title IV administration involves an extraordinarily complex regulatory structure that would be challenging to transfer or maintain during a departmental transition. The program includes more than 300 pages of regulations, with significant compliance requirements for institutions6. Recent rule changes have created new financial responsibility, administrative capability and certification requirements applicable to institutions participating in Title IV programs7.

Presidential Assurances vs. Implementation Reality

While President Trump has indicated that essential functions like Pell Grants, Title I funding, and programs for students with disabilities would be "fully maintained and redistributed to various other agencies and departments," the implementation details remain unclear18. The executive order instructs Education Secretary Linda McMahon to "undertake all necessary actions to facilitate the dissolution" while ensuring continuous provision of services8.

However, the Department's workforce has already been reduced from over 4,000 to approximately 2,000 employees through layoffs and voluntary resignations14. This reduction in administrative capacity raises serious questions about the continuity of Title IV program implementation.

Other HEA Titles: Significant but Less Catastrophic Impact

While all HEA titles would face disruption through departmental dismantling, Title IV's combination of massive funding scale, direct impact on enrollments, and regulatory complexity makes its destabilization particularly consequential.

Other HEA titles, while important, would not create the same level of immediate financial and enrollment chaos:

• Title I: Provides general provisions and administrative requirements, but lacks direct funding mechanisms
• Title II: Supports teacher preparation programs, but with significantly smaller funding scales
• Title III: Provides institutional aid for minority-serving institutions, representing important but more targeted support
• Titles V-VIII: Offer specialized program support for specific institutional types or educational priorities

Conclusion

The dismantling of the Department of Education threatens all federal higher education programs, but Title IV student aid programs represent the most consequential area for potential upheaval. The scale of financial support, direct impact on enrollment and access, complexity of administration, and early evidence from FAFSA disruptions all indicate that Title IV destabilization would produce the most severe consequences for higher education institutions and students.

While the administration has promised to maintain essential functions, the mechanisms for doing so remain unclear, and the significant reduction in departmental workforce suggests potential administrative challenges ahead. The higher education community must closely monitor this transition to ensure that critical student financial support systems remain functional during this unprecedented departmental restructuring.

Citations:

1. https://thehill.com/homenews/education/5179987-trump-executive-order-department-of-education-linda-mcmahon/
2. https://www.insightintodiversity.com/fafsa-issues-led-to-decreased-enrollment/
3. https://www.everycrsreport.com/reports/IF12780.html
4. https://onwardstate.com/2025/03/20/how-the-dismantling-of-the-department-of-education-will-affect-college-students-across-the-nation/
5. https://www.levyinstitute.org/pubs/rpr_2_6.pdf
6. https://imprimis.hillsdale.edu/the-crisis-and-politics-of-higher-education/
7. https://www.faegredrinker.com/en/insights/publications/2024/2/significant-new-financial-responsibility-administrative-capability-and-certification-requirements-loom-ahead-for-title-iv-institutions
8. https://www.nbcnews.com/politics/trump-administration/education-department-trump-what-is-next-student-loans-fafsa-rcna197302
9. https://www.startribune.com/trump-orders-a-plan-to-dismantle-the-education-department-while-keeping-some-core-functions/601240066
10. https://www.nbcnews.com/news/education/dozens-colleges-see-fafsa-turmoils-impact-freshman-classes-rcna167342
11. https://sgp.fas.org/crs/misc/R43351.pdf
12. https://www.asugsvsummit.com/video/preview-of-the-great-upheaval-higher-educations-past-present-and-uncertain-future
13. https://www.cnn.com/2025/03/20/politics/dismantling-department-of-education-trump/index.html
14. https://www.insidehighered.com/news/government/student-aid-policy/2024/11/04/what-abolishing-education-department-could-mean
15. https://campuscafesoftware.com/title-iv-student-financial-aid-guide/
16. https://www.insidehighered.com/news/government/student-aid-policy/2025/03/13/how-education-department-layoffs-could-affect-higher
17. https://www.insidehighered.com/news/government/student-aid-policy/2024/11/14/future-financial-aid-under-trump
18. https://www.latimes.com/world-nation/story/2025-03-19/trump-to-order-a-plan-to-shut-down-the-us-education-department
19. https://www.insidehighered.com/news/admissions/traditional-age/2024/10/23/after-fafsa-issues-steep-drop-first-year-enrollment
20. https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2020-2021/appendices/appx-g-higher-education-act-1965-table-contents-august-26-2020
21. https://www.nasfaa.org/news-item/35894/Trump_Signs_Executive_Order_Seeking_to_Dismantle_ED
22. https://www.nasfaa.org/news-item/35508/ED_Title_IV_Student_Aid_Exempt_From_White_House_Pause_on_Federal_Grants_and_Loans
23. https://www.nea.org/nea-today/all-news-articles/how-dismantling-department-education-would-harm-students
24. https://www.carnegiehighered.com/blog/fafsa-delays-impact-2024-enrollment/
25. https://fsapartners.ed.gov/knowledge-center/library/functional-area/Overview%20of%20Title%20IV
26. https://www.insidehighered.com/news/government/student-aid-policy/2025/02/07/five-ways-education-department-impacts-higher-ed
27. https://www.usatoday.com/story/news/politics/2025/03/12/education-department-cuts-student-loan-fafsa-iep-impact/82310137007/
28. https://www.cbsnews.com/news/trump-fafsa-student-loans-what-does-the-department-of-education-do/
29. https://www.foxsports.com/stories/nfl/dallas-cowboys-free-agency-draft-2025
30. https://www.washingtonpost.com/business/2024/06/22/gen-z-millennials-debt-inflation/
31. https://help.studentclearinghouse.org/compliancecentral/knowledge-base/gainful-employment-financial-value-transparency-faqs/
32. https://19thnews.org/2025/03/trump-executive-order-department-of-education/
33. https://www.ctpost.com/news/education/article/bridgeport-school-superintendent-search-20230032.php
34. https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2024-06-20/implementation-gainful-employment-funding-metric-requirements-institutions-under-administrative-capability-and-financial-responsibility
35. https://crsreports.congress.gov/product/pdf/R/R43159
36. https://www.bestcolleges.com/news/trump-wants-to-end-education-department-what-does-that-mean-for-financial-aid/

The Evolving Landscape of Student Lending: Fintech Disruption and Bank Adaptation (Glen McGhee)

The student loan market represents a significant segment of consumer lending in the United States, with approximately $1.7 trillion in outstanding debt. This market is undergoing profound transformation as financial technology companies challenge traditional banking institutions, offering innovative lending models and digital-first experiences. This report compares the current footprint of fintechs and banks in student lending and analyzes potential market shifts if federal loan guarantees were eliminated.

The student loan market continues to expand at a significant pace despite periodic concerns about sustainability. The private student loan sector alone was valued at $412.7 billion in 2023 and is projected to reach $980.8 billion by 2032, representing a compound annual growth rate of 10.1%15. Overall, the student loans market is growing at approximately 9.2% annually over the next five years7, indicating robust demand despite economic uncertainties and policy fluctuations.

Traditional banks maintain a significant but gradually diminishing presence in the student loan market. These institutions typically offer standardized loan products with competitive rates for students with established credit histories or qualified cosigners. Their underwriting processes tend to be more conservative than newer market entrants, focusing primarily on traditional creditworthiness metrics and income verification.

Among the major bank participants in student lending, Citizens Bank stands out for its nationwide offerings for undergraduate and graduate students, as well as parent loans. The bank distinguishes itself through its multiyear approval process, reducing the need for repeated hard credit inquiries for continuing students2. Other significant bank participants include PNC Bank, which offers specialized loans for health and medical professions, and Sallie Mae, a pioneer in private student lending that has evolved from its origins as a government-sponsored enterprise.

Financial technology companies have aggressively entered the student loan market, introducing innovations in product design, underwriting methodologies, and customer experience. These entrants typically operate with lower overhead costs than traditional banks and leverage alternative data sources for credit decisions, potentially expanding access to students who might not qualify under conventional underwriting standards.

SoFi represents one of the most prominent fintech lenders, distinguished by its no-fee structure and flexible repayment arrangements with fixed APRs ranging from 4.19% to 14.83%16. College Ave provides private student loans covering up to 100% of school-certified attendance costs with APRs ranging from 3.99% to 17.99%16. Ascent has gained market recognition for its non-cosigned loan options that use future income potential rather than current credit history as the primary underwriting criterion.

Marketplace platforms have emerged as important intermediaries in the student loan ecosystem. LendKey partners with credit unions and community banks, functioning as both a marketplace and loan servicer5. Credible allows borrowers to compare offers from multiple lenders through a single application and soft credit check, streamlining the shopping process for students and families5.

Based on the search results, the following represent key players in the current student loan market:

1. Citizens Bank - Offers multiyear approval and diverse loan options
2. PNC Bank - Specializes in healthcare profession loans and offers scholarship opportunities
3. Sallie Mae - Pioneer in student lending with undergraduate and graduate loan options
4. Discover - Provides comprehensive student loan offerings with competitive rates
5. Wells Fargo - Previously a major player but has exited the market
6. MEFA - Regional specialized educational lender
7. Education Loan Finance (ELFI) - The student loan division of SouthEast Bank
8. Custom Choice - Specialized private student loan provider

9. SoFi - Known for no-fee structure and comprehensive financial products
10. College Ave - Offers loans covering up to 100% of attendance costs
11. Earnest - Features borrower-friendly terms and competitive rates
12. Ascent - Specializes in non-cosigned loan alternatives
13. LendKey - Marketplace connecting borrowers with community banks and credit unions
14. Credible - Student loan comparison marketplace
15. MPower Financing - Focuses on international students
16. Juno - Group-based negotiation platform for better loan terms
17. Iowa Student Loan - Nonprofit state-based lender
18. EDvestinU - Nonprofit lender affiliated with New Hampshire Higher Education Loan Corporation
19. Stride Funding - Offers income share agreements and alternative financing models
20. CommonBond - Socially responsible student lender (not mentioned in results but a known market participant)

These institutions represent a mix of traditional financial services providers and newer, technology-focused entrants. The market continues to evolve with mergers, acquisitions, and strategic partnerships reshaping competitive dynamics.

The potential elimination of federal student loan guarantees would fundamentally alter the market landscape, likely causing significant contraction and restructuring. This change would transform both the size of the market and the nature of participating institutions.

Without federal guarantees, student lending would revert to pure risk-based lending principles, dramatically changing accessibility and terms. The current market structure exists largely because federal guarantees remove most default risk for lenders, enabling broader access to financing and more favorable terms than would otherwise be available.

A Reddit discussion highlighted this dynamic: "Making students loans not guaranteed and having it work like a real loan and with that allowing it to be bankruptible would seem like a good idea"10. However, this would mean loan approval would be "based on criteria such as the borrower's ability to repay within a reasonable time frame and their high school performance"10, fundamentally changing who could access education financing.

If federal guarantees disappeared, the market would likely undergo significant consolidation:

1. : Banks with substantial balance sheets and diverse revenue streams would have the greatest capacity to absorb increased lending risk. Among current participants, Citizens Bank, PNC Bank, and Discover would be best positioned to maintain student lending operations, though with substantially tightened criteria and higher rates.
2. : Only those fintechs with sophisticated risk assessment models, alternative revenue streams, or access to institutional capital would likely survive. SoFi, having diversified beyond student lending into banking, investing, and insurance, would be among the strongest contenders. Earnest, with its sophisticated approach to underwriting, and Ascent, which already specializes in future-earnings-based lending, might also persist.
3. : The market would likely shift toward income-based repayment models like those offered by Stride Funding, which ties repayment to future earnings rather than relying on traditional debt structures9. These models effectively shift some risk from borrowers to investors who bet on future earnings potential.

The student loan market would likely contract substantially from its current size, perhaps by 50-70%, as lenders would focus primarily on:

1. Students pursuing high-return degrees at prestigious institutions
2. Borrowers with exceptional credit profiles or financially strong cosigners
3. Fields of study with clear employment paths and strong salary prospects

The market might realistically shrink to 7-10 major players from the current diverse landscape. The following institutions would be most likely to maintain significant student lending operations:

1. Citizens Bank
2. PNC Bank
3. Discover
4. SoFi
5. Earnest
6. Ascent
7. Stride Funding or similar income-share agreement providers

Smaller regional banks, credit unions, and less-capitalized fintechs would likely exit the market entirely or dramatically reduce their student lending portfolios.

The removal of federal student loan guarantees would represent a fundamental restructuring of higher education financing in America. While it might address concerns about tuition inflation and excessive student debt, it would also significantly restrict educational access for many students, particularly those from lower and middle-income backgrounds.

Financial institutions with sophisticated risk assessment capabilities, substantial capital reserves, and diversified business models would be best positioned to remain in the market. The shift would likely accelerate innovation in alternative financing models, potentially leading to more alignment between educational costs and expected post-graduation outcomes.

For students, the changed landscape would require more careful consideration of educational investments, with greater emphasis on return-on-investment calculations for various fields of study and institutions. For higher education institutions, this shift would create strong pressure to demonstrate value and employment outcomes, potentially leading to significant changes in program offerings and pricing models.

This market transformation would ultimately test whether private financial markets alone can effectively finance broad access to higher education or whether some form of public support remains necessary to achieve societal goals of educational opportunity and economic mobility.

Citations:

1. https://dirox.com/post/top-fintech-trends-2025
2. https://www.bankrate.com/loans/student-loans/student-loans-from-banks/
3. https://www.forbes.com/sites/adamminsky/2025/03/12/yes-your-student-loans-will-be-impacted-by-the-mass-department-of-education-layoffs/
4. https://thefinancialbrand.com/news/payments-trends/smaller-card-issuers-risk-losing-volume-to-bank-and-fintech-bnpl-players-187234
5. https://money.com/student-loans/
6. https://abc13.com/post/loan-expert-breaks-down-impact-shrinking-department-educations-changes-involving-student-borrowers-repayment-rules/16007586/
7. https://www.mordorintelligence.com/industry-reports/global-education-student-loans-market
8. https://thefinancialbrand.com/news/payments-trends/consumer-lending-to-pick-up-in-2025-186906
9. https://builtin.com/articles/fintech-lending-applications
10. https://www.reddit.com/r/moderatepolitics/comments/1h0nqx0/would_getting_rid_of_guaranteed_student_loans_be/
11. https://www.marketresearchfuture.com/reports/fintech-lending-market-22833
12. https://money.com/best-banks-for-students/
13. https://www.skyquestt.com/report/fintech-lending-market
14. https://www.goodwinlaw.com/en/insights/publications/2025/01/insights-finance-ftec-whats-next-for-fintechs-in-2025
15. https://www.fintechfutures.com/techwire/private-student-loans-market-to-reach-980-8-billion-globally-by-2032-at-10-1-cagr-allied-market-research/
16. https://www.debt.com/student-loan/types/private/best/
17. https://www.fortunebusinessinsights.com/fintech-market-108641
18. https://home.treasury.gov/system/files/136/Assessing-the-Impact-of-New-Entrant-Nonbank-Firms.pdf
19. https://www.consumerfinance.gov/about-us/newsroom/cfpb-survey-reveals-impacts-of-student-loan-debt-relief-and-repayment-challenges/
20. https://www.techmagic.co/blog/fintech-trends/
21. https://educationdata.org/student-loan-refinancing
22. https://www.cato.org/briefing-paper/ending-federal-student-loans
23. https://www.spglobal.com/_assets/documents/ratings/research/101610419.pdf
24. https://www.cnbc.com/select/best-big-banks-for-student-loan-refinancing/
25. https://studentaid.gov/manage-loans/forgiveness-cancellation/debt-relief-info
26. https://www.accenture.com/content/dam/accenture/final/industry/banking/document/Accenture-Banking-Top-10-Trends-2025-Report.pdf
27. https://www.forbes.com/advisor/student-loans/best-private-student-loans/
28. https://www.cfr.org/backgrounder/us-student-loan-debt-trends-economic-impact
29. https://www.independentbanker.org/article/2025/02/05/kick-lending-up-a-notch-with-digital-solutions
30. https://www.nerdwallet.com/best/loans/student-loans/student-loan-refinance-companies
31. https://www.levyinstitute.org/pubs/rpr_2_6.pdf
32. https://www.credible.com/student-loans/best-student-loan-companies
33. https://globalxetfs.co/en/fintech-momentum-could-continue-into-2025/
34. https://money.usnews.com/loans/student-loans/best-private-student-loans
35. https://www.americanprogress.org/article/project-2025-would-increase-costs-block-debt-cancellation-for-student-loan-borrowers/
36. https://fineksus.com/top-banking-and-fintech-trends-for-2025/
37. https://www.nasfaa.org/news-item/34788/What_a_Second_Trump_Term_Could_Mean_for_Student_Financial_Aid
38. https://www.globalxetfs.com/fintech-momentum-could-continue-into-2025/
39. https://www.lendingtree.com/student/
40. https://www.businessinsider.com/personal-finance/student-loans/best-student-loan-refinance-companies
41. https://studentaid.gov/understand-aid/types/loans/interest-rates
42. https://www.bankrate.com/loans/student-loans/private-student-loans/
43. https://www.mossadams.com/articles/2025/02/2025-financial-services-outlook
44. https://www.federalregister.gov/documents/2024/07/31/2024-16838/request-for-information-on-bank-fintech-arrangements-involving-banking-products-and-services
45. https://www.usnews.com/banking/student-accounts
46. https://hesfintech.com/blog/lending-trends-2025/
47. https://fintech-market.com/blog/consumer-lending-trends-in-2025
48. https://www.siegemedia.com/strategy/fintech-statistics
49. https://firstpagesage.com/business/fintech-valuation-multiples/
50. https://www.retailbankerinternational.com/features/banking-and-payments-experts-share-sector-forecasts-for-2025/
51. https://www.ycombinator.com/companies/industry/credit-and-lending
52. https://tcf.org/content/commentary/the-assault-on-the-save-plan-has-brought-student-debt-relief-to-a-crossroads/
53. https://www.mckinsey.com/industries/financial-services/our-insights/fintechs-a-new-paradigm-of-growth
54. https://www.studentloanprofessor.com/student-loan-companies/
55. https://www.businessinsider.com/personal-finance/student-loans/best-private-student-loans
56. https://www.nasdaq.com/articles/student-loan-forgiveness-what-know-ahead-2025
57. https://www.acainternational.org/news/three-fintech-predictions-for-2025/
58. https://www.datocms-assets.com/23873/1728379495-final_07-10_pledge-impact-report.pdf
59. https://futureskillsacademy.com/blog/fintech-in-student-loan-management/
60. https://plaid.com/resources/fintech/fintech-trends/
61. https://milkeninstitute.org/sites/default/files/2025-02/FinTechFeb2025.pdf
62. https://geniusee.com/single-blog/fintech-industry-trends
63. https://www.businessinsider.com/personal-finance/student-loans/best-graduate-student-loans
64. https://www.marketresearchfuture.com/reports/student-loan-market-22878
65. https://www.consumerfinanceandfintechblog.com/2024/09/cfpb-settles-action-against-student-loan-servicer-with-industry-ban/
66. https://www.forbes.com/advisor/student-loans/best-low-interest-student-loans/
67. https://www2.deloitte.com/us/en/pages/regulatory/articles/future-of-fintechs-risk-and-regulatory-compliance.html
68. https://protectborrowers.org/elon-and-doge-are-attempting-to-illegally-delete-the-cfpb/