What Student Loan Borrowers Should Know About Trump’s Attempts to Shut Down the Department of Education

The Trump administration appears to be taking steps to unwind the U.S. Department of Education. An executive order is expected to be issued later this month, according to widespread reports. And in the meantime, administration officials are already taking steps against department employees.

It is unclear how far the administration can, or will, go in its efforts to shutter or diminish the Education Department, which was created in 1979 under President Jimmy Carter. But one thing is clear: any resulting disruptions associated with significant changes to the department may impact student loan borrowers in a big way.

Here’s what to know. 

Trump may issue executive order to “unwind” the Department of Education

Reporting by major national news outlets indicates that the White House is working on an executive order that would direct the Education Department to “unwind” itself or diminish its footprint.

To be clear, an executive order cannot eliminate a federal department like the Department of Education. It would take an act of Congress to do that. While congressional Republicans have filed legislation to disband the department, it’s unlikely to pass and become law. 

Democrats would likely oppose the legislation, and while Republicans now hold majorities in both the House and the Senate, they don’t have sufficient numbers to overcome an expected filibuster by Democrats in the Senate. And it’s unlikely that a Department of Education repeal could be included in a reconciliation bill Republicans are currently working on (the reconciliation process allows lawmakers to bypass the filibuster and enact legislation with simple majorities in the House and Senate, but only to pass budget-related legislation).

Trump Administration takes other steps against the Department of Education

But the Trump administration may not need legislation passed by Congress to kneecap the Department of Education. 

Administration officials have already placed dozens of department staff on leave, and more employees could be targeted in the coming weeks. In addition, the so-called Department of Government Efficiency (DOGE), a unit spearheaded by Elon Musk, has reportedly already penetrated Department of Education computer systems, including potentially sensitive datasets that include personal details on millions of federal student aid recipients, according to The Washington Post. It’s also possible that Congress, in an upcoming government funding bill, may cut funding for Department of Education programs, including potentially the Office of Federal Student Aid, which oversees the Direct federal student loan system.

“Voters put President Trump back into office to lower the cost of living and stand up for working people,” said Mike Pierce, executive director of the Student Borrower Protection Center (SBPC), in a statement on Tuesday. “Instead, President Trump has spent his first weeks burning political capital and pissing off voters from coast to coast: raising the cost of basic necessities, handing power over to billionaire oligarchs like Elon Musk, and pushing wildly unpopular executive actions like the rumored plan to abolish the U.S. Department of Education.” 

The SBPC pointed to a recent poll conducted by Data for Progress, showing that 61% of respondents somewhat or strongly oppose an executive action to abolish the Department of Education.

How the Department of Education wind-down could impact student loan programs

If the Education Department gets shut down, it will not eliminate federal student loans or associated repayment or loan forgiveness programs. Instead, the Office of Federal Student Aid (FSA), which administers those programs, would simply be moved to a different government department, likely the Department of Treasury. 

Legislation introduced last year by Senator Mike Rounds (R-SD) would codify the transition of FSA from the Department of Education to the Department of Treasury. Rounds characterized his bill as a “rehoming these federal programs in the departments where they belong” in a statement released last November.

Many legal experts doubt that FSA could be moved to the Department of Treasury or other government departments without Congress passing a law authorizing it. The Higher Education Act (HEA), a major law that governs much of the department’s operations, states that FSA is to be housed at the Department of Education, and that does not appear to be discretionary. Any attempt to unilaterally move FSA to a different department or officially disband the Department of Education without congressional authorization would likely invite a serious legal challenge. 

“Shutting down @usedgov is a short-sighted, deeply unpopular recipe for chaos and confusion,” said the National Student Legal Defense Network in a statement on X earlier this week. “And trying to do it without Congress is clearly illegal. Our team is already exploring options to stop this unconstitutional overreach.”

But the Trump administration could still dramatically change the Education Department without formally shutting it down:

• The administration could sideline additional staff, as it is expected to do in the coming weeks. 
• It could shut down programs or offices within the department, even if doing so invites legal challenges. 
• President Trump could sign legislation passed by Congress to reduce the department's funding, forcing the agency to operate its remaining programs with a smaller budget and diminished workforce.

Advocates warn of “chaos and confusion” for borrowers

All of this could significantly impact federal student loan programs, as it could mean longer processing times for certain loan discharge and forgiveness programs, clerical and administrative errors, recordkeeping problems, and poor oversight of contractors such as student loan servicers. 

“Your student loans will NOT go away if ED is dismantled,” said the Student Debt Crisis Center (SDCC) in a blast email to student loan borrowers earlier this month. “More than 45 million borrowers rely on the Department of Education to process applications, provide servicer oversight, and deliver critical information about existing programs and updates. Dismantling ED will strip borrowers of protections from for-profit loan servicers and send the entire student loan and education system into complete chaos… We are sounding the alarm.” 

In a previous email to borrowers in December, the SDCC warned that dismantling or diminishing the Education Department could cause “chaos and confusion.” If the Department of Education is effectively kneecapped, “There could be a breakdown in how loans are managed, leading to even more chaos for borrowers.”

For now, student loan borrowers will have to continue to contend with a fluid, volatile, and uncertain environment, while the ultimate fate of the Department of Education remains uncertain.