For over 40 years, the Department of Education (ED) has operated programs impacting elementary, secondary, and post-secondary education. However, on March 20, 2025, President Trump signed an executive order to begin the process of dismantling the Department of Education.
The move is a controversial one, and it could have a significant effect on college students and existing student loan borrowers. Here’s what we know so far.
What Happened to the Department of Education
The ED was established in 1980 as a Cabinet-level agency. For post-secondary education, the ED plays a pivotal role; it handles the Free Application for Federal Student Aid (FAFSA) and federal financial aid programs, including:
- Pell Grants: Pell Grants are for undergraduate students from low-income households. Unlike other forms of financial aid, these grants don’t have to be repaid.
- Federal Work-Study: Through the federal work-study program, qualifying students can get jobs while in school and use the earnings toward their education expenses.
- Federal Student Loans: The majority of student loans are issued under the federal loan program; federal student loans are for undergraduate students, graduate students, and parents of undergraduate students. Historically, federal student loans have had lower rates and more generous repayment terms than other loans.
President Trump said he was focused on eliminating waste within the federal government. As part of the efforts of the Department of Government Efficiency (DOGE), ED has been a major target. As of March 2025, President Trump’s executive order would dismantle the ED, and shift the department’s activities to other agencies (or cancel them altogether).
It’s a controversial move. Although dismantling the agency would require an act of Congress, the Trump Administration has already moved forward with slashing the department’s workforce.
How The End of the Department of Education Affect Families
In President Trump’s executive order, it says:
“The Secretary of Education shall, to the maximum extent appropriate and permitted by law, take all necessary steps to facilitate the closure of the Department of Education and return authority over education to the States and local communities while ensuring the effective and uninterrupted delivery of services, programs, and benefits on which Americans rely.”
However, financial aid and college admissions experts are skeptical that federal aid programs will be uninterrupted, considering the vast reduction in staff. As a result, the end of the ED could have a substantial impact on families. Here’s how it may affect college students and existing student loan borrowers:
For Incoming and Current College Students
For high school seniors planning on attending college in the fall and current college students, filling out the FAFSA is a key step in applying for and qualifying for federal, state, and institutional aid.
There has been no discussion of eliminating the FAFSA, so students should continue to fill it out as usual. With a smaller workforce, there may be some delays, so students should complete the FAFSA as soon as possible.
When you submit it, keep copies of the FAFSA confirmation page and the Student Aid Index. That way, if there are any errors or system outages, you’ll have a backup you can use when talking with your college.
For Student Loan Borrowers
Previously, experts believed the Trump Administration would move federal loans to the Department of the Treasury. However, President Trump said in March that the loan portfolio will be moved to the Small Business Administration.
On social media, rumors abound, with many people claiming that the dismantlement of the ED means they no longer need to repay their loans. However, that’s not the case.
There are provisions in your federal aid Master Promissory Note that state that the loan agreements can be adjusted or modified at any time, so your obligation to repay continues even if the government moves the federal student loan program to another agency.
As a result, there will likely be little effect on your loans. Federal loans are managed by third-party companies — the loan servicers — so the changes wouldn’t impact your loan servicer account, and your payments will be due on the regular schedule.
What’s Next?
Dismantling the ED will not be an easy or quick process; it’s likely to be challenged, as it would require an act of Congress to dissolve the agency. However, the executive order signals significant changes to the ED and federal financial aid, and it’s possible there could be delays or service disruptions. If you’re applying for aid, you can minimize the impact by submitting the FAFSA as soon as possible.
If you have questions about your financial aid, you should contact the college financial aid office. For student loan borrowers, direct any questions to your student loan servicer.
