Experts warn that despite promises that the Department of Education will “continue to deliver” on programs for which it is legally accountable, such as student loans, the Trump administration’s newest move to dismantle the department is likely to cause major problems for borrowers.
Nearly half of the agency’s employees were let go on Tuesday. The action is a part of a larger initiative to abolish the Education Department entirely, as stated by President Donald Trump and Education Secretary Linda McMahon. Federal student loan borrowers are arguably the Americans who contact with the Education Department the most directly, despite the fact that many people equate the department—and the disputes surrounding it—with K–12 institutions.
The Office of Federal Student Aid of the agency is in charge of coordinating with student-loan servicers, who handle loan inquiries and payments for students. At least 300 FSA personnel were included in the force reduction, according to a list of impacted workers that is making the rounds online. It’s obvious that FSA is being severely slashed, even though the list probably contains some errors.
According to one FSA employee involved in the force reduction, there had already been “a mass deterioration of the staff over the last few months” as a result of previous attempts to reduce staff, including buyout offers, before she was fired on Tuesday. “We were already starting to feel the pressures of having fewer staff,” they stated.
The individual claimed that because the group of employees handling borrower complaints had departed the organization, they had been removed from their position in recent weeks and assigned to implementing a court settlement involving students who had been defrauded by their institutions. The individual claimed that the employees in charge of responding to a crucial query for servicers had also departed the organization due to uncertainty surrounding payback plans after a court ruling. They said that the person’s section had a backlog of 9,000 complaints even prior to all of the efforts to close the Education Department.
“Before, borrowers already struggled to navigate the repayment and forgiveness and discharge programs; it’s just going to cause more chaos and wreak more havoc for them,” said the employee. “Borrowers will bear the brunt of this. It truly kills my heart when I give it too much thought.”
In an emailed statement, Education Department deputy assistant secretary for communications Madi Biedermann said the layoffs had no effect on staffers who handle student loan servicing or the Free Application for Federal Financial Aid, or FAFSA.
“The Department will deliver high-quality customer service to borrowers,” Biedermann stated.
However, analysts doubt that cutting employees—such as those in charge of managing borrower complaints—will have no effect.
Clare McCann, managing director for policy and operations at the Postsecondary Equity & Economics Research Center at American University, said, “The argument that cutting half the staff at the department won’t affect Pell grants and student loans and other critical functions seems more like wishful thinking than anything reality-based.”
McCann, a former employee of the Education Department, continued, “It’s not entirely clear to me how the department would be able to maintain even a basic level of customer service for students, for schools, for borrowers with the depth of cuts that we’ve seen here.”
Cuts occur during a stressful period.
The changes were made at a time when the student loan system was already expected to undergo significant disruption. When borrowers fall behind on their loans for the first time in five years, they risk having their earnings and Social Security payments withheld, as well as negative effects on their credit scores. In the meantime, in reaction to a court ruling over a Biden administration attempt to restructure student loan repayment, the Trump administration has temporarily removed applications for the most economical repayment plans.
The extent to which the Trump administration can close the Education Department is uncertain. The agency can only be shut down by Congress, and the personnel terminations will probably be challenged in court. However, it’s evident that the administration and Republicans in general are taking a step that could affect borrowers of student loans.
Trump has expressed his desire to transfer the student loan portfolio to the Small Business Administration or the Treasury Department. Additionally, in an effort to generate money for tax cuts, House Republicans have been considering modifications to student loan repayment plans that would make them less generous for borrowers.
At EdTrust, a research and advocacy group dedicated to education equity, Blair Wriston, senior government-affairs manager, characterized this push as a “dual-track effort” that will “make college more expensive and less accessible, particularly for our low-income students and students with limited financial means.”
According to Wriston, as K–12 institutions serve the kids who depend on federal funds the most, low-income, students of color, and rural students will probably be the ones most affected by staff reductions and larger initiatives to destroy the Education Department. Furthermore, he stated that the Education Department is crucial in upholding civil rights and the rights of kids with disabilities, who are likely to be negatively impacted.
However, because it controls so much of the funding for universities and oversees the student loan program, the Education Department has a greater involvement in higher education even though the discussions surrounding its function mostly focus on K–12 schools. The majority of funding for K–12 schools comes from local governments and states.
Frederick Hess, director of education-policy studies at the conservative think tank American Enterprise Institute, stated that “any of these changes are likely to have a much bigger impact on higher education and possibly most significantly when it comes to student lending and student financial aid in higher education, because that’s the biggest part of what the department does.” “The Department of Education is a megabank with a small K-12 policy shop attached.”
Hess expressed concern about the existing strategy, despite his sympathy for the objective of reducing the agency.
“Do I think it’s possible to drastically reduce the workforce without negatively affecting children and families? I do—I think there are many chances for cuts,” Hess remarked. However, I believe it would rely on how they were created; on how strategies to use technology or optimize services have been formed.
“There’s been no messaging about the rationale about who is let go and who is kept,” he said. “We haven’t seen anything that makes clear the kinds of savings taxpayers should expect or how they’re going to address questions about routine operations after the cuts.”
