The Trump administration is reportedly considering selling portions of the federal government’s $1.6 trillion student loan portfolio, The Guardian reports.

Senior officials in the Education and Treasury Departments have discussed a potential student loan debt sale, focusing on high-performing loans, and have met with financial industry representatives to gauge interest and feasibility, according to the outlet. About 45 million Americans currently hold federal student loans.

Experts warn that transferring loans to private investors could limit oversight, borrower protections, and the government’s ability to cancel or forgive debt. Daniel Zibel, vice president and chief counsel at the National Student Legal Defense Network, described the idea as “complex and unprecedented,” as The Guardian notes.

He told the outlet, “The system for student debt is incredibly complicated. For the administration to do this in a way that lives up to the protections that exist in the law for student loan borrowers makes it even more complicated.”

Legal and logistical challenges remain for a student loan debt sale, including how repayment programs and government guarantees would work if loans were transferred to private companies.

The proposal aligns with the administration’s broader efforts to shrink the Education Department and reduce the government’s role in higher education.

“This is all part of that same conversation, because the department manages this huge, billion-plus-dollar loan portfolio,” Michele Zampini, associate vice president of federal policy at the Institute for College Access and Success, said, per The Guardian, “You can’t really wind down the department while still having responsibility for this type of loan portfolio. It’s driven by their desire to wind down the department more broadly. This is the roadblock in their way in many senses.”

Zambini also pointed to borrower protections being at risk with a sale, adding, “There is no indication that there is, first of all, interest from the private market. And if there is interest, their interest would likely be to squeeze as much profit from the repayment as they could. And so the interest of a private purchaser and a private investor would very likely not be to provide borrowers with any type of generous benefits or relief programs.”

Mike Pierce, executive director of Protect Borrowers, an advocacy organization, criticized the plan as favoring financial industry interests.

“Now we know why President Trump and Secretary [Linda] McMahon are hell bent on squeezing every last dollar out of families with student debt. Once again, we see that across the Trump Administration, when Wall Street’s demands run against the financial needs of working people, the banks get what they want,” he said in a company statement.

This is not the first time the idea has surfaced. During Trump’s first term, the Department of Education hired consultants to evaluate the portfolio’s potential sale value, but the plan was paused after the COVID-19 pandemic and concerns about low returns, The Guardian reports.

No final decisions on the student loan debt sale have been announced, and officials have not provided a timeline for next steps.