Substantial changes are happening at the U.S. Department of Education (ED), and it’s raising a lot of questions for students who depend on programs like FAFSA and federal student loans.
Employees at the U.S. Department of Education (ED) were informed that all physical offices will be closed on Wednesday, March 12. This directive followed an announcement that the agency would be laying off 50 percent of its workforce.
Since Secretary Linda McMahon's confirmation earlier this month, the Department has faced heightened scrutiny. The release of the Secretary’s "Final Mission" memo has only deepened concerns, not just among employees uncertain about their future, but also for the countless individuals who depend on ED services. Programs like the Free Application for Federal Student Aid (FAFSA®) and federal student grants and loans are now creating anxiety for students and borrowers.
ED Office Closures
All physical offices will be closed starting Wednesday, March 12, citing "security reasons". Employees were told to take their laptops home and leave by 6 p.m. on Tuesday. Employees with current telework agreements can work through the office closures. Details about security concerns have not been shared.
For students, it’s important to know that this closure shouldn't have long-term impacts to services like FAFSA or federal student loans. The closure is of the physical offices in DC and nationwide through the regions, not the day-to-day operations.
Layoffs and Staffing Changes
One of the biggest announcements today is that the ED plans to lay off 50 percent of its workforce. This comes on top of previous staff reductions that happened after hundreds of employees opted to take the resignation offer by the President at the start of his term.
Here’s where things stand. Before these changes, the ED had around 4,000 employees. After prior resignations and this new round of layoffs, the ED will drop to just over 2,100 employees.
It is unclear exactly which departments will be affected. However, federal student aid programs, like FAFSA and student loans, are required by law and need staff to operate. This may mean fewer layoffs in the Office of Federal Student Aid (FSA).
What to Expect as a Current Federal Student Loan Borrower?
Recent discussions around student loans have brought significant changes into focus. A newly signed executive order could potentially limit which organizations qualify for Public Service Loan Forgiveness (PSLF). However, these changes would require Congressional approval, and legal challenges are likely if they proceed.
Additional changes on the horizon include the elimination of the SAVE Plan and the transition of 8 million borrowers currently in SAVE forbearance this fall. Furthermore, questions remain about what will happen at the end of the repayment term for income-contingent repayment (ICR) and Pay as You Earn (PAYE) plans, as the SAVE decision has impacted forgiveness opportunities under these programs.
What to Expect as a New Federal Student Loan Borrower?
If you’ve completed the 2024-2025 or 2025-2026 FAFSA, we currently do not anticipate any changes to your eligibility for federal student aid. If you’ve already received financial aid for this year or have been awarded a federal student aid package for the upcoming fall semester, your funding is expected to remain intact.
However, there may be changes to aid provided directly by your school. In some cases, students have had their admissions offers or institutional aid rescinded after universities lost federal grants they were relying on.
The Future of the Federal Student Loan Program
Although President Trump distanced himself from Project 2025 during his campaign, some of its proposals appear to be gaining traction. One key initiative involves shifting federal student loans back to private banks, reminiscent of the former Federal Family Education Loan Program (FFELP). However, this transition would depend on private lenders rejoining the program, an outcome that remains uncertain. If the FFELP is not reinstated, a new federal student loan program would need to be created to return the programs to private banks. This could potentially lead to a scenario where borrowers must navigate repayment for three distinct types of federal student loans, complicating the process even further.
For now, these ideas are still just proposals. No immediate changes to the student loan system have been made.
What’s Next for the U.S. Department of Education?
There has been some debate around the possibility of dismantling the Department of Education entirely. However, such a move would require an act of Congress, which seems unlikely in the near future. Instead, the focus appears to be on reducing the department’s operations rather than eliminating it altogether.
While these adjustments might complicate its day-to-day functions, legally mandated services—such as federal student aid which includes the administration of the FAFSA and federal student loans—are expected to remain in place.
Uncertainty can be stressful, but remember, many of these changes are still in the preliminary stages. Staying informed is one of the best ways to ensure you stay on track to meet your educational goals.