The U.S. Department of Education is facing massive layoffs as the Trump administration follows through on its plan to shut down the agency. Officials announced that nearly half of the department’s employees would be let go, leaving just over 2,100 workers.
Education Secretary Linda McMahon confirmed the plan in an interview with Fox News, stating, “His directive to me, clearly, is to shut down the Department of Education.”
The department plays a key role in funding public schools, enforcing anti-discrimination laws, and managing the federal student loan program, which impacts nearly 43 million borrowers. With its future uncertain, many students and graduates are left wondering how their loans and repayment plans will be affected.
Will student loans disappear?
Despite the shutdown, student loans are not going away. President Trump has indicated that oversight of federal student loans would likely shift to a different federal agency.
“For the most part, students wouldn’t even notice,” said Andrew Gillen, a research fellow at the Cato Institute for Economic Freedom. “Where you mail your FAFSA, or repayment checks, might change.”
However, transitioning such a large program to another department could pose logistical challenges. Some experts argue that Congress would need to pass legislation to fully dismantle the Education Department, while others believe Trump may find ways to bypass congressional approval.
Which agency will oversee student loans?
Trump has suggested that student loan programs could be moved to the U.S. Treasury Department, the Commerce Department, or the Small Business Administration (SBA).
“I don’t think the Education (Department) should be handling the loans. That’s not their business,” Trump told reporters at the White House.
He also mentioned that the SBA, under new administrator Kelly Loeffler, could take over loan oversight. Loeffler, a former U.S. senator from Georgia, reportedly supports the idea.
Treasury department seen as a logical fit
Some experts believe the Treasury Department would be the best choice for managing student loans.
“For a lot of the student loan repayment plans, you need income verification,” Gillen explained. “The Treasury already has that. So just from an administrative perspective, the Treasury already has a lot of information that is necessary to implement the student loan programs.”
Additionally, the Treasury Department has the infrastructure to handle a large borrower base. With over 40 million federal student loan borrowers, the transition would be complex, but not unprecedented for an agency experienced in handling financial programs.
Other education programs may be split between agencies
While student loans could fall under the Treasury Department, other programs managed by the Education Department may be distributed across multiple agencies.
Public school funding, enforcement of anti-discrimination laws, and Pell Grants are among the programs that could be reassigned to different parts of the federal government.
“This callous move will directly impact the 90% of students who attend public schools by denying them the resources they need to thrive,” said Randi Weingarten, president of the American Federation of Teachers.
Backlash from educators and advocacy groups
Educators, parents, and student advocacy groups have strongly opposed the plan to shut down the Education Department.
Organizations such as Educators for Excellence, the Council of Parent Attorneys and Advocates, and the National Center for Youth Law have joined teachers’ unions in condemning the move. Critics argue that dismantling the department could weaken oversight and reduce educational opportunities for millions of students.
As Trump moves forward with the plan, the fate of student loans and federal education policies will depend on how Congress and the courts respond. For now, borrowers can expect changes in loan management but no immediate cancellation of their debts.
