What Will Happen to Financial Aid if Trump Closes the Education Department?
The Trump administration appears to be moving forward with plans to shutter — or at a minimum, shrink — the Education Department.
Fully closing down the 45-year-old department, an idea that President Donald Trump supported during his campaign, would require congressional approval. But the president is pursuing plans to weaken the department via executive order, according to reports from multiple media outlets.
U.S. Secretary of Education Linda McMahon said Friday during an interview on Fox News the president "intends to sign the order" and that he's made it "crystal clear" closing the department is his intent, though she didn't provide details on the timing.
Although it is the smallest federal agency, the Education Department manages substantial funding programs for K-12 schools and higher education. Its office of Federal Student Aid distributes about $120 billion in grants and student loans to college students each year. In managing a $1.6 trillion student loan portfolio, the office oversees repayment plans for nearly 43 million borrowers.
Can Trump actually shut down the Education Department?
Shutting down the Education Department would require nearly universal Republican support in both chambers of Congress, including a 60-vote majority in the Senate to overcome a filibuster.
What the administration is able to accomplish via executive order is less clear. According to ABC News, a draft of the order calls for McMahon to facilitate shutting down the department by taking steps "permitted by law."
It’s unlikely that an executive order could make any major structural changes to how student aid is dispersed, though that may not stop the administration from trying, says Preston Cooper, senior fellow in higher education policy at the American Enterprise Institute.
Because the programs themselves are written into legislation, the courts would likely intervene if the administration tried to shut them down using an executive order, he says.
"I think people conflate closing the department with actually ending the programs that the department oversees," Cooper adds. "And I think there's a lot less appetite, including among Republicans, for actually ending some of these programs."
Rather than disavowing college financial aid completely, the GOP is trying to shut down what it sees as an inefficient, unaccountable bureaucracy, he says.
The idea is likely to move some Education Department programs to other federal agencies. Project 2025 — a map for what conservative lobbyists would like the Trump administration to accomplish — suggests transferring the student loan portfolio to the Treasury Department, for example. On Thursday, Trump told reporters he'd consider moving oversight of federal student aid to the Small Business Administration.
Recent polling suggests that upheaval at the Education Department is not especially popular among the public. One poll from Morning Consult suggests that many Americans actually want to increase funding for the Education Department, while another — from think tank New America — found that only 26% of adults support dismantling the department.
Even if the Education Department remains open, there is still plenty that Trump and McMahon can do to limit its power, says Edward Conroy, senior policy manager in the higher education program at New America.
Already, the administration has laid off some Education Department employees and offered buyouts to others. According to an email obtained by Politico, officials told staffers the buyout offers preceded a "very significant" reduction in workforce. About 300 employees accepted the buyouts this week, Mahon told NewsNation Friday.
"When you eliminate people with that kind of experience, it’s really hard to replace," Conroy says. "And so, while you can’t eliminate the Department of Education wholesale without an act of Congress, you can do a lot of harm to its ability to succeed."
How would changes at the Education Department affect financial aid?
More than 17 million students fill out the FAFSA each year as the first step to accessing federal grants and loans, state scholarships and institutional aid. When a student fills out the application, it has to be processed by staff at the department, and then the information is sent to their college. The college then determines a student’s financial aid package for its specific school.
The process may sound straightforward, but experts say managing it requires technical knowledge of complex systems and backend protocols.
"There could be some bureaucratic headaches that happen if the office of Federal Student Aid is moved around," Cooper says, noting that there may be a "learning curve" for new staffers taking over and possible delays in getting aid dispersed.
And if one agency didn’t absorb all of the financial aid functions, that would make life harder for students, Conroy says. Hypothetically, students could have to go to one place to get help completing their FAFSA, a different place to complete the master promissory note that’s required to take out student loans, and then a third place when they have to start repaying their student loans.
"The financial aid system is complicated," he says. "We need simplification in the system, not additional complexity."
One suggestion to downsize the department that experts noted as particularly concerning is an idea to replace the Federal Student Aid call center with artificial intelligence chatbots. That proposal ignores the nuance needed to answer students' questions, as answers are variable depending on a student’s family circumstances and income level, says Sayda Martinez-Alvarado, a senior policy analyst for higher education at EdTrust, an advocacy group that focuses on equity for low-income and Black and Latino students.
Delays in notifying students what sort of aid they qualify for can affect where and even whether students attend college. Many already enrolled students rely on the money from Pell Grants and federal work study not only to pay tuition bills but also to afford food, transportation and rent.
For evidence of its central role in students' lives, look no further than January's short-lived federal funding freeze: Martinez-Alvarado says "we saw a lot of extreme panic from students" before the move was quickly blocked by courts.
As another example, Conroy and Martinez-Alvarado both point to the chaos that stemmed from the FAFSA overhaul over the past two years. Nearly four years after Congress passed a law aimed at simplifying the financial aid application, the department bungled the rollout of the new form during the 2023-24 school year. Repeated delays and technical glitches actually made the process of applying for aid harder, not easier, for some students.
"A lot of that had to do with not having enough manpower, so you can only imagine what is going to happen if capacity is cut even further," Martinez-Alvarado says.
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