President Donald Trump has signed an executive order to dismantle the U.S. Department of Education. This decision, long promised during his campaign, focuses on transferring the control of K-12 education back to the individual states. In addition, the executive order addresses the federal student aid programs which millions of students rely on each year for financial aid resources for college.
Let's breakdown the key details regarding the order and its impacts for higher education.
What Does the Executive Order Include?
The executive order affects two primary areas of education.
K-12 Education
The transfer of power to states aims to give states and parents more control over the education systems. The focus here is to empower states to create policies and manage educational resources independently. According to the administration, this move is intended to reduce federal bureaucracy, allowing public schools more flexibility to meet the needs of their communities.
Federal Student Aid Programs
The executive order also addressed the federal student aid programs, specifically federal Pell Grants, and federal student loans. Though these programs will remain within the Department of Education for now. However, there was more of a discussion about the student loan portfolio.
An Eye on Student Loan Management
President Trump’s executive order highlights significant concerns about the Department of Education’s capacity to efficiently manage its $1.6 trillion federal student loan portfolio. To underscore the issue, the president compared the Department’s modest 1,500 staff members to banking giant Wells Fargo’s workforce of 200,000 employees—a bank with a comparable size portfolio. The order states, “The Department of Education is not a bank, and it must return bank functions to an entity equipped to service America’s students.”
Although student loans will stay with the Department for now, this statement signals potential future changes in how student loan portfolio will be managed, or how federal student loans may be administered or disbursed in the future. During his presidential campaign, President Trump proposed the idea of shifting the student loan program back to private lenders, similar to the former Federal Family Education Loan (FFEL) program. However, no further details on potential actions have been disclosed at this time.
Diversity, Equity, and Inclusion
The executive order also mentions the termination of funding for certain programs, including those that focus on "diversity, equity, and inclusion” or promote gender ideology. This aligns with previous conversations in the administration about redirecting educational resources toward what they see as core academic priorities.
Impact on the Office of Federal Student Aid
The Office of Federal Student Aid plays a vital role within the U.S. Department of Education. In the last academic year alone, it distributed $121 billion in federal aid, helping over 10 million students through grants, loans, and work-study programs. The office also oversees the Free Application for Federal Student Aid (FAFSA®), an essential resource for students seeking financial aid.
Any impacts to the Office of Federal Student Aid following the recent executive order, along with the workforce reductions, remain uncertain. There have been signs of technical issues, including issues with the FAFSA and the StudentAid.gov website. In addition, growing concerns have arisen about the potential impact on college transparency data, as staff reductions have affected teams responsible for maintaining these vital data initiatives.
What Does This Mean for You?
For college students relying on federal aid, recent updates from the U.S. Department of Education, including an executive order, have sparked concern among students and student loan borrowers. In times of uncertainty, it’s best to make decisions based on the most reliable and current information available.
As of now, the 2025-2026 FAFSA is open, and students planning to seek federal aid for the upcoming academic year should proceed with completing it. For student loan borrowers, it’s important to continue making payments according to the terms and conditions of your loan.
Stay informed by monitoring announcements from the Office of Federal Student Aid, as potential policy changes could impact your financial aid opportunities or loan repayment strategy going forward.