Credible takeaways
- Trump has issued an executive order to dismantle the Department of Education.
- Federal student loans and financial aid programs will remain in place, even if the department is shut down.
- The Federal Student Aid (FSA) office could be reassigned to another agency, potentially disrupting loan servicing, FAFSA processing, and aid distribution.
- Borrowers should stay informed and prepare for potential delays that may affect repayment plans and student loan forgiveness programs.
President Donald Trump has issued an executive order to begin dismantling the U.S. Department of Education, signaling a major shift in education policy. The order won't immediately eliminate the agency, but it does have implications for federal student loan borrowers.
What is the executive order?
Trump's executive order signed on March 20 instructs Education Secretary Linda McMahon to begin shutting down the Department of Education. The order delegates the DOE's functions to individual states, aligning with the Trump administration's broader strategy to diminish federal control and streamline government agencies. It comes a little more than a week after the agency said it is cutting its workforce of more than 4,100 by almost half.
Good to know:
The Department of Education oversees federal student aid, including loans, grants, and work-study programs. It also enforces civil rights protections in education, distributes funding to schools, and sets policies that affect colleges and K-12 schools.
At a White House press event where he signed the order, Trump said core programs such as Pell Grants, Title I funding, and resources for children with disabilities and special needs will be preserved and redistributed to other agencies and departments.
“But beyond these core necessities, my administration will take all lawful steps to shut down the department,” Trump said. “We're going to shut it down, and shut it down as quickly as possible. It's doing us no good. We want to return our students to the states.”
Critics say shutting down the DOE would create uncertainty for students and schools, particularly regarding financial aid processing and enforcing disability protections.
“If successful, Trump's continued actions will hurt all students by sending class sizes soaring, cutting job training programs, making higher education more expensive and out of reach for middle class families, taking away special education services for students with disabilities, and gutting student civil rights protections,” National Education Association President Becky Pringle said in a statement.
A full shutdown of the Department of Education would ultimately require approval from Congress. Democrats and some Republicans are expected to oppose the plan.
See Also: Understanding the Average Cost of College: Tuition, Fees, and More
What it means for student loan borrowers
For now, your federal student loans and access to future funding will remain in place. Even if the DOE shuts down, federal law requires these programs to continue.
Mark Kantrowitz, an expert on education financing and author of “How To Appeal for More College Financial Aid,” said the executive order is unlikely to have an immediate impact on student borrowers because the management of those loans is outsourced to independent student loan servicers.
“The main impact will be on oversight and on final approval of student loan forgiveness and discharge, since that is managed in-house by the U.S. Department of Education,” he added.
One major uncertainty is who will oversee Federal Student Aid (FSA). The Trump administration has proposed shifting FSA to another agency, such as the Treasury Department or the Small Business Administration (SBA). If that happens, it could disrupt key processes like FAFSA applications, financial aid disbursements, and loan servicing.
Borrowers should also prepare for potential service delays. “There has already been some disruption to the ability of borrowers to get help with their loans or to file a complaint, due to the Department of Education laying off nearly half its staff,” Kantrowitz said.
On top of that, key repayment plans are already in flux. “It is also unclear what will happen with the form for choosing an income-driven repayment plan, since that was taken offline a few weeks ago and is not expected to be restored for another two months, plus or minus,” he said.
How borrowers can prepare
To avoid potential complications, Kantrowitz advises logging into your StudentAid.gov account and your loan servicer's website to download copies of your student loan records. He recommends preserving important information such as your payment history, loan balances, interest rates, and repayment plan information.
“This sort of information has a tendency to get lost or corrupted during transitions, such as changing loan servicers,” says Kantrowitz.
See Also: How To Find Your Student Loan Servicer
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