This week’s news highlights debates about privatizing federal student loans, shifts in how the Education Department operates, broader financial trends, and renewed federal guidance urging colleges to address rising default risk.
Here’s a quick look at the most important stories shaping higher education and student finances this week for February 26, 2026.
🎓 Headlines at a Glance
- The Education Department is in ongoing talks about privatizing federal student loans.
- ED launches new interagency agreements affecting federal education programs.
- Higher education faces financial sustainability challenges and enrollment shifts.
- The Education Department urges colleges to adopt best practices to reduce loan defaults and protect federal aid access.
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1. The Education Department urges colleges to adopt best practices to reduce loan defaults and protect federal aid access.
The U.S. Department of Education confirmed that it is continuing discussions about potentially selling parts of the federal student loan portfolio to private lenders.
Undersecretary Nicholas Kent acknowledged ongoing stakeholder meetings but stressed no final decisions have been made. Proponents argue privatization could increase competition and reduce costs while critics warn it could weaken borrower protections, eliminate income-driven repayment plans, and expose borrowers to higher rates.
➡️ Impact: A shift to private management of federal loans could fundamentally change repayment options and protections for millions of borrowers, especially those with low credit scores or seeking forgiveness.
2. Education Department Launches New Interagency Agreements
The Department of Education announced new interagency agreements that reassign some federal education functions (including foreign gift reporting and school safety programming) to departments such as State and Health and Human Services.
The moves are part of what the Education Department calls efforts to streamline federal operations and better serve students and families, though critics worry it could complicate oversight and delay funding delivery.
➡️ Impact: How federal programs are administered affects everything from financial aid access to compliance burdens on colleges and districts — and potential delays or uncertainty can ripple into student services and planning.
3. Higher Education Sector Faces Financial Stress and Enrollment Shifts
A new report from Deloitte underscores brewing financial stress across U.S. colleges, driven by declining enrollments, demographic shifts, and evolving federal financial aid policy. Presidents at many institutions say they see continued downward pressure on enrollments (particularly at the graduate level) and growing risk of institutional closures or mergers in the coming years.
➡️ Impact: Fewer students and budget pressure can translate into tuition increases, program cuts, or reduced campus services — decisions that affect cost and quality for current and future students.
4. Education Department Urges Colleges to Adopt Best Practices to Reduce Loan Defaults
The Education Department issued guidance this week urging colleges to strengthen default prevention and repayment support as student loan repayment fully resumes after pandemic relief pauses.
The guidance comes amid rising nonpayment rates across institutions and highlights that more than 1,800 schools now have nonpayment levels at or above 25%, which risk translating into even higher official cohort default rates.
I shared on LinkedIn this week how many colleges have been resistant to supporting their students and alumni with their student loans historically.
➡️ Impact: Rising defaults not only harm borrower credit but can jeopardize a college’s ability to offer federal Direct Loans and Pell Grants — touching every student’s access to affordable education.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.