The Trump administration recently announced that the U.S. Department of Education may soon begin sharing federal student loan risk information with students and families.

According to a September 5 press release, the Department of Education's Office of the Student Loan Ombudsman will adopt a "proactive approach to improving financial literacy" so that students "can make more prudent borrowing decisions."

The agency stated that its efforts come at a time when outstanding federal student debt is approaching $1.7 trillion, with "loan default and delinquency rates remaining at historically high levels."

Elaine Rubin, Corporate Communications Director at Edvisors, said: "Addressing financial literacy and college costs during the financial aid process is never a bad thing."

Historically, the Ombudsman's Office has primarily handled complaints from student loan borrowers. However, it remains unclear what the fate of this work will be after the Department of Education's massive layoffs in March.

Experts say the layoffs have also raised questions about how the Trump administration will launch this new borrowing education effort.

Higher education expert Mark Kantrowitzcz said: "The real question is whether there are still people in the Ombudsman's Office to do these things."

The Trump administration stated that borrowers need more financial guidance amid "sobering statistics" in the student loan portfolio.

The U.S. Department of Education said that more than 42 million Americans carry federal student loan debt. As of June, over 6 million borrowers were delinquent, and more than 5 million were in default.

Deputy Secretary of Education Nicholas Kent said in a statement: "By providing clearer guidance and support at the front end of the college journey, we believe students will make more informed decisions, resulting in lower debt burdens, better repayment outcomes, and greater satisfaction with their educational investment."

Consumer advocacy groups say the Department of Education's efforts could divert resources from addressing more pressing issues, including helping millions of borrowers who cannot access affordable repayment options.

"Shifting focus to borrower education diverts attention from the urgent need to address consumer complaints and systemic service failures," said Carolina Rodriguez, Director of the Student Debt Consumer Assistance Program in New York.

Recent court documents show that as of the end of July, the Department of Education had a backlog of more than 1.3 million applications from borrowers trying to enter Income-Driven Repayment (IDR) plans.

Part of the reason for the piled-up applications is the termination of President Biden's SAVE (Saving on A Valuable Education) plan. The program was designed to significantly reduce bills for millions of borrowers but faced Republican-led legal challenges and was ultimately abolished by President Donald Trump's legislation this summer.

Consumer advocates say many student loan borrowers now cannot afford the repayment plans available to them. The SAVE plan had much lower monthly payments than other plans, and recent legislation has further narrowed borrowers' repayment options.

Persis Yu, Deputy Executive Director and Managing Counsel at the Student Borrower Protection Center, said: "No amount of financial literacy can solve the problem of more than 1.3 million IDR applications in backlog, nor can it provide answers for borrowers who have to wait hours to learn about their loan status."