With the U.S. Department of Education set to be cut in half, former officials and analysts are grappling with what it could mean for Americans who are in college or paying off student loans.
On Tuesday night, Secretary of Education Linda McMahon announced layoffs affecting approximately 1,300 staffers across every corner of the agency, on top of 572 who had already accepted buyout and early retirement offers. The terminations will leave the department 50% smaller than when Trump was inaugurated.
In its statement, the department promised it would “continue to deliver on all statutory programs” that fall under its purview, including Pell Grants and student loans. “Today’s reduction in force reflects the Department of Education’s commitment to efficiency, accountability, and ensuring that resources are directed where they matter most: to students, parents, and teachers,” McMahon said.
But veterans of the department predicted that the sweeping cuts could scramble its basic ability to operate and mean less reliable service for students and schools.
“We’re talking about devastating cuts to an agency that was already understaffed,” said Sarah Sattelmeyer, a former Education Department official under the Biden administration who is now at the think tank New America. “There wasn’t fat there. You’re cutting into bone.”
Education lobbying groups also said McMahon had offered little to no clarity on how she intended to keep her agency running.
“I don’t know if there is a plan and it’s not just out there, or if there is no plan,” said Karen McCarthy, vice president for public policy and federal relations at the National Association of Student Financial Aid Administrators, or NASFAA. “But right now, there’s a lot of uncertainty about how they’re going to be redistributing work and carrying on key functions.”
What’s being cut
Outsiders are still trying to assess exactly which offices at the department have been most affected, but a spreadsheet circulating online of unionized staffers caught in the layoffs provided a glimpse of the fallout (sources noted that the spreadsheet appeared to list some staffers as having been let go incorrectly but also said it gave a useful overall picture).
Among those cut, it listed 326 employees in the office of Federal Student Aid, which manages student lending and Pell. Those reductions alone could amount to almost a quarter of FSA’s workforce, which the Department of Education’s website said was about 1,400 strong.
Some of the hardest hit areas include the School Participation Section, which monitors colleges and universities to ensure they follow the aid programs’ rules and don’t cheat students, as well as the office that helps oversee outside contractors, including student loan servicers.
Story Continues
President Trump has said he wants to eliminate the Department of Education and has reportedly been preparing to sign an executive order instructing McMahon to get the agency ready to be wound down. Actually eliminating it would require an act of Congress, but the administration has also signaled it could try to move some of its functions to other agencies. Trump said this week that he did not think the department should handle student loans and was looking at handing off that responsibility to the Treasury.
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Secretary of Education Linda McMahon leaves the House Chamber after President Donald Trump addresses to a joint session of Congress at the Capitol in Washington, Tuesday, March 4, 2025. (AP Photo/Jose Luis Magana) ·ASSOCIATED PRESS
Will I still get my student loans?
The student loan and Pell programs are written into law, and the department says it will continue to operate them. Much of the day-to-day work of administering aid is also handled by outside contractors, rather than agency staff.
But with fewer employees at the department, operations could start to break down, experts said.
“You need people to oversee the contractors to make sure they’re doing what needs to be done,” said Tariq Habash, a policy adviser in the department under the Biden administration. “I think there are real concerns about what FSA’s capacity already was to be able to properly oversee that.”
One danger is that if the many backend systems that need to coordinate in order to process aid applications and release money to schools start malfunctioning, there may not be enough staff to quickly catch the problems and get them fixed.
Last year’s college acceptance season was marred by the glitchy rollout of a new, simplified FAFSA form, which required a major effort by the agency to fix. On Wednesday, the NASFAA tweeted that it was receiving reports that some families were once again encountering problems and warned that “troubleshooting could be complicated by yesterday’s staff reductions.”
“There are so many pieces, and all of them are interconnected,” said New America’s Sattelmeyer. “All of them have to be working correctly. And if you have fewer people, the machinery slows down. Across the board, that’s going to make borrowers and schools suffer.”
Some are concerned the cuts could hamper the agency’s ability to restart its income-based repayment plans for student borrowers. The department has stopped accepting or processing applications for the popular programs in response to a court ruling, ostensibly in order to make some legally necessary changes to the application. But it hasn’t given a timeline for when applications will restart, creating a panic among many borrowers. The cuts to its legal staff could potentially delay that effort further.
The loss of manpower could also hurt the department’s ability to post updated information about student aid programs or respond to complaints about loan servicers. Many former officials consider these kinds of wraparound services an essential part of helping families navigate the confusing aid process.
What else could affect students
Former officials who spoke with Yahoo Finance were especially concerned about the cuts to the School Participation Section, where they said entire regional offices appear to be on the chopping block. With looser oversight, they said, schools could essentially be left to self-regulate, and students could see a return of predatory practices by for-profit colleges and other online education companies that eventually led to the closure of schools like Corinthian Colleges.
“What we’ve seen in the past is that there are numerous colleges that, when they are not appropriately overseen, will violate the law and rip off students,” Habash said.
Jordan Weissmann is a Senior Reporter at Yahoo Finance.
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