Our colleague and college specialist Donna Cournoyer shares her thoughts on the shake up at the Department of Education, and what it means for colleges and universities, and students
When the new administration took office on January 20, they swiftly took action, making big changes to multiple US government agencies, including the US Department of Education.
Layoffs, mass firings, and talk of eliminating some departments altogether. The US Department of Education is at the top of that list.
Linda McMahon was confirmed on March 3 as the next Secretary of Education, seemingly with the sole purpose of dismantling the entire US Department of Education.
As of March 6, President Trump is expected to issue an executive order soon- aimed at abolishing the Education Department, according to people briefed on the matter, as reported in the Wall Street Journal.
However, it appears that eliminating the department would take an act of Congress.
Background
What is the US Department of Education?
Federal agency created by Congress in 1979
- Responsible for overseeing education policies and programs across the country
- Employs more than 4,000 people
- Annual budget of $79 Billion
- Overseen by the US Secretary of Education
Main Roles of the US Department of Education
Funding for US Public Schools
While most funding comes from state and local governments, the US Department of Education provides between 6-13% of funding for public schools, according to a 2018 report from the U.S. Government Accountability Office.
- Title I-Helps serve lower-income communities. In 2023, the Education Department received more than $18 billion for Title I.
- IDEA (Individuals with Disabilities Education Act)-Provides money to help districts serve students with disabilities. In 2024, the department received more than $15 billionfor IDEA.
Created by separate acts of Congress, Title I was signed into law in 1965, and IDEA signed into law in 1975. It is highly unlikely that these acts would be undone. An act of Congress would be needed, and they have broad bipartisan support.
Tracking of Student Achievement Through the “Nation’s Report Card”
The department oversees the National Assessment of Educational Progress (NAEP) known as the “Nation’s Report Card”.
- Congress mandated this assessment in 1969, and tests students in reading, math, science and other subjects
- It also offers insights into attendance, economic conditions, and students’ educational backgrounds
- Educators, policymakers, and researchers use this data to work toward improving the K-12 education across the US
Oversight of Federal Grants and Federal Student Loans for College Students
The department manages federal aid programs, including Pell Grants and student loans which helps students afford higher education.
Key Functions Include:
- Managing the federal student loan portfolio, approximately $1.6 Trillion, including oversight of outside contracted companies who manage the loans.
- Managing the FAFSAapplication (Free Application for Federal Student Aid) which determines eligibility for grants, loans, and work-study programs for college students.
- More than 17 millioncurrent students and new applicants fill out the FAFSA each year.
- FSA (Federal Student Aid) provides approximately $120.8 billion in grant, work-study, and loan funds each year to help students, and their families, afford a college education.
- This includes $33 Billion in Pell Grants for low/middle-income undergraduates.
- The FSA also prevents fraud and abuseby ensuring that schools and borrowers comply with federal regulations to prevent financial mismanagement.
Data Collection on Colleges and Students
Through the IPEDS (Integrated Postsecondary Education Data System), the US Department of Education gathers independent research, statistics, and evaluations of colleges throughout the country. Schools are required to complete detailed reports each year.
- This information helps students and parents analyze and compare different schools through admissions statistics, academic outcomes, graduation rates, need-based eligibility data and more.
Although the current administration has said it would close the Department of Education, and return “all education, and education work and needs back to the states”, it is already up to the states and local agencies to determine what is taught in classrooms. The department does not dictate what is taught at K-12 schools, colleges, or universities.
Recent Changes to the Department of Education Since the Inauguration and Their Potential Implications
Repayment of Federal Student Loans
If federal student loans face disruptions, students may have to move to private lenders, where they may be subject to higher interest rates and fewer repayment or forgiveness options.
- The current administration has already paused applications for some income-driven repayment plans.
- If the administration moves the loan repayment for the $1.6 Trillion in loans to another agency, such as the Treasury department, (an idea that has been discussed) it likely won’t be a quick or smooth process.
- The future of the loan repayment plans is unsure, students could see a higher monthly payment if the plan options change.
- One extreme possibility is the privatization of the entire student loan system, which would have wide-spread financial implications for loan holders.
University Research Funding Proposed Cuts
The current administration has proposed significant reductions in federal funding for university research, particularly targeting the National Institutes of Health (NIH).
Legal Actions have been initiated. A federal judge in Massachusetts issued a preliminary injunction blocking the implementation of the 15% cap on indirect cost reimbursements.
Despite the legal challenges, this has created widespread concerns among research institutions.
- Stanford Universityhas implemented a hiring freeze with leadership citing the potential NIH funding reductions and increased taxes on large private university endowments as factors necessitating these precautionary measures.
- Rice University anticipates that this will jeopardize critical projects, including innovative cancer treatments and detection technologies. They warn that without sufficient support for indirect costs, they may be faced with difficult choices of raising tuition or halting certain research endeavors altogether.
These proposed cuts pose significant challenges to universities, and could disrupt essential research, lead to job losses, and potentially affect the ability of the US to have a competitive edge in global scientific and technological arenas.
Other broader implications beyond individual universities, is a growing concern that reduced research investment could hinder scientific innovation and diminish the US global leadership in technological advancement.
Some analysts caution that this may allow other nations, notably China, to surpass the US in critical areas like artificial intelligence and quantum computing.
Federal Grants and Loans- Eligibility and Processing at Colleges and Universities
- The FAFSA has already gone through a horrible two years of a new form rollout. Changing oversight of this form, (a possibility) or eliminating the US Department of Education, would likely result in more upheaval of the application process for college students.
- Eligibility –It is unsure at this point if any actions will be taken to change how eligibility is calculated by the FAFSA form.
Federal Employee Layoffs or the Elimination of the US Department of Education
- Fewer employees at the department and FSA (Federal Student Aid) could mean a disruption of the processing and flow of Federal aid including federal grants and student loans.
- Note that federal aid resources such as Pell Grants and student loans are established by Congress, and an executive order to end them is not a legal option and highly unlikely.
- If the processing of federal aid changes hands, this may cause significant challenges for the timely disbursement and processing of aid for students.
Final Thoughts
As an insider in the Higher Education sphere for much of my career, I understand the processes and intricacies of how colleges and universities operate on many levels.
Colleges are run like a business and rely on tuition to meet budgetary needs. Any federal cuts can have significant impacts.
Endowments (the funds collected from donors) are designed to be a permanent source of income and are used to make long-term investments.
These funds are used to sustain the operating costs and to offer discounts on tuition to attract students to enroll. If other funding is reduced, more strain may be put on endowments going forward.
Financial aid offices coordinate the awarding and disbursement of funds through many systems to get the funds for students disbursed in a timely manner while also complying with federal regulations.
During a time when colleges are still rebounding after the pandemic, and enrollment is on a steady decline due to a shrinking birth rate.
Along with FAFSA application issues, the upheaval caused by the current administration’s decisions, particularly to the US Department of Education, will likely creating more challenges.
Since the Covid-19 pandemic, seventy-four colleges have closed, merged, or announced plans to close, according to bestcolleges.com.
Institutions may become even more unaffordable, research and learning opportunities may be of less quality, and the already complicated, opaque process of applying to college is likely to become even more challenging and complicated.
The biggest immediate effect for students likely will have to do with financial aid.
Many fewer employees at the Department of Education (or of its demise) will make the processing and disbursement of federal funds challenging and likely create disruption and delays. Exactly how this plays out is yet to be seen.
As students and families approach applying to college (and for those in college), it is a good practice to remain informed, particularly as significant changes are likely on the horizon.
Seeking professional advice when possible and keeping calm as you approach college planning will pay off when it comes time to make the four-year commitment, and decide on financing options.
-DC