The Trump administration appears to have stepped back from its initial swift efforts to begin dismantling the U.S. Department of Education. Just last Monday, Linda McMahon was confirmed as Secretary, and reports earlier this week suggested that an executive order was imminent. However, the White House Press Secretary has clarified that such reports are premature, as the administration is still reviewing and coordinating plans for the Department.
Despite the delay, structural changes to the U.S. Department of Education are still anticipated. As Secretary McMahon stated in her "Final Mission" memo, “...disruption leads to innovation and gets results.”
ED's Final Mission
Secretary McMahon is advancing President Trump’s initiative to dismantle the U.S. Department of Education, aligning with key goals emphasized during his campaign and early days in office. Although the Trump administration has issued several executive orders, their direct impact on the Department of Education has been limited thus far.
The initiative focuses on three core priorities. First, empowering parents as the primary decision-makers in their children’s education. Second, redirecting taxpayer funds toward foundational subjects like math, reading, science, and history, rather than diversity, equity, and inclusion (DEI) programs or gender ideology. Third, ensuring postsecondary education provides a clear path to well-paying careers that align with workforce demands.
In her memo, Secretary McMahon acknowledges that achieving these goals will take time, with further steps planned in the coming months. However, the proposed changes have sparked anxiety among those relying on federal aid for college or managing federal student loans. Many fear disruptions to their education or the potential loss of borrower benefits that help manage student loan repayment.
For student loan borrowers, these initiatives represent a sharp contrast to those of the Biden administration, which prioritized student loan forgiveness as a strategy to address the mounting student debt crisis.
Dismantling the U.S. Department of Education
The U.S. Department of Education, established as a federal agency in 1979, more than a decade after the signing of the Higher Education Act, oversees education initiatives across early childhood, K-12, and postsecondary levels. However, the Trump administration has been largely critical of the agency’s effectiveness in improving public K-12 education. The administration argues that the Department has failed to deliver meaningful results and advocates for shifting greater responsibility for K-12 education to state governments, with increased parental involvement in decision-making.
During her confirmation hearing, Secretary McMahon emphasized that her intent is not to abolish or eliminate programs, but to reallocate them to other government agencies where they may function more efficiently. For instance, she proposed transferring the Office for Civil Rights to the Department of Justice and placing the student loan portfolio under the Treasury.
Recent reports indicate significant changes within the Office of Federal Student Aid (FSA), which oversees federal student aid programs. On Thursday, news outlets revealed that eight staff members responsible for managing the Federal Student Aid Feedback System—a platform that collects complaints and feedback on federal student aid—had been dismissed. Some of those terminated were also responsible for reviewing borrower defense discharge applications, which allow for student loan forgiveness under the court ruling in Sweet v. Cardona. The FSA is currently dealing with a backlog of over 4,000 borrower defense emails awaiting resolution.
Before these dismissals, it was reported that up to 10% of FSA staff had accepted a resignation option offered by the administration. Additionally, in late February, the administration requested that the Department of Education submit layoff plans by mid-March. These staffing changes come amid broader discussions about restructuring federal education programs.
The FSA’s budget primarily consists of funds allocated to students, with the majority directed toward federal grants and student loan programs. It remains unclear what specific measures will be included in the anticipated executive order or how program transfers to other agencies will unfold. Should any actions contradict existing laws, legal challenges from states are anticipated, echoing similar scenarios seen during the Biden administration.
Transferring Federal Student Loans to the Treasury
It's unclear how easy it would be to transfer the federal student loan program to the Treasury—as we are not aware of how the action is planned. The Office of Federal Student Aid has developed complex systems and processes to administer these programs in compliance with laws, regulations, and policies. Replicating these systems within the Treasury, while also accounting for legacy loans from older programs—such as the now-defunct Federal Perkins Loan Program—would be an immense challenge.
Given the extensive infrastructure managed by the program, it’s improbable that the Treasury would establish its own systems to oversee or continue providing federal student loans. Instead, it's likely that the systems and some Federal Student Aid employees would transition to the Treasury to maintain operations for the Direct Loan Program.
Federal student loans often come with repayment terms of up to 30 years, excluding periods of forbearance or deferment. If federal student loans default, discharging the debt through bankruptcy is difficult. In some cases, borrowers may carry defaulted federal student loans for decades, with the loans only being discharged upon death. There are loans that were originated decades ago which remain in the federal student loan portfolio.
For current borrowers, even if the program were transferred to the Treasury, the terms and conditions of existing loans are unlikely to change. Changes to certain aspects of Direct Loans, like interest rates, would require congressional action. Similarly, programs such as Public Service Loan Forgiveness (PSLF) which are established by law and cannot be modified or eliminated without Congressional action. At this time, no significant changes to these provisions are anticipated.
However, while current loan terms may remain stable for now, future administrations or new legislation could bring changes to the federal student loan program. Historically, the program has undergone significant overhauls, and further reforms, whether incremental or sweeping, remain a possibility.
The Pending Impact to Students
The uncertainty surrounding recent developments in federal student aid has sparked widespread anxiety among students and borrowers nationwide. From the FAFSA® (Free Application for Federal Student Aid) to student loan repayment plans, the potential changes are causing concern.
Right now, it’s crucial for prospective college students, current students, and borrowers to stay informed. While there are still many steps before major changes to federal student aid programs take effect, students should focus on what remains certain. For example, the FAFSA for the 2025-2026 academic year is open and available. Completing the FAFSA is essential for most students to ensure they don’t miss out on financial aid opportunities. If you’ve already received financial aid, rest assured—you won’t lose it or be required to pay it back if there are changes.
For borrowers with student loans, it’s important to note that program adjustments or changes to the agency which manages the student loan program does not guarantee loan forgiveness. Recent disruptions, such as legal rulings affecting the SAVE Plan, highlight the complexity of these issues. Borrowers enrolled in the SAVE Plan are currently in administrative forbearance until at least September 2025. Additionally, due to the court decision, the U.S. Department of Education has temporarily halted processing income-driven repayment (IDR) applications for at least 90 days. This means borrowers looking to switch from the SAVE Plan or modify their IDR plan will need to wait until applications resume.
Staying informed is critical during this period of change. These decisions affecting the U.S. Department of Education and other aspects of government, have the potential to influence many aspects of your financial and educational journey. While we don’t yet have all the answers, more clarity is expected in the coming weeks and months.