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- President Trump has signed an executive order to dismantle the Department of Education, transferring its key responsibilities to other federal agencies.
- The Small Business Administration will take over the management of federal student loans, while the Department of Health and Human Services will oversee special needs and nutrition programs.
- Experts warn of potential chaos and disruptions for millions of student loan borrowers and families relying on these programs.
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Essential Context
On March 21, 2025, President Trump signed an executive order aimed at dismantling the Department of Education. This move involves transferring significant responsibilities, including the management of federal student loans and special needs programs, to other federal agencies.
Core Players
- President Trump – Signed the executive order to dismantle the Department of Education.
- Linda McMahon – Education Secretary, tasked with facilitating the closure of the Department of Education.
- Kelly Loeffler – SBA Administrator, will oversee the management of federal student loans.
- Robert F. Kennedy Jr. – Health and Human Services Secretary, will manage special needs and nutrition programs.
Key Numbers
- $1.7 trillion – The amount of federal student loan debt to be managed by the Small Business Administration.
- 40 million – The number of student loan borrowers affected by the transfer.
- 50% – The percentage of the Education Department’s staff that has been cut as part of the reorganization efforts.
- 43% – The percentage of the Small Business Administration’s workforce reduction as part of its agency-wide reorganization.
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The Catalyst
President Trump’s executive order is part of a broader effort to reduce federal bureaucracy and return education authority to the states. This move aligns with conservative policies advocating for reduced federal oversight in education.
“Closing the Department does not mean cutting off funds from those who depend on them—we will continue to support K-12 students, students with special needs, college student borrowers, and others who rely on essential programs,” Education Secretary Linda McMahon stated.
Inside Forces
The Department of Education has already cut its staff by nearly 50%, which experts warn could lead to significant disruptions in service delivery. The agency manages complex programs, including $1.7 trillion in student loan debt and billions in funding for low-income schools and special needs programs.
“It takes resources to manage that asset, including trained staff to make sure borrowers have good information and colleges can administer loan programs properly,” said Peter Granville, a higher education finance expert.
Power Dynamics
The dismantling of the Department of Education requires congressional approval, which is a significant political hurdle. Despite this, the Trump administration is pushing forward with reassigning key responsibilities to other agencies.
The Small Business Administration, now tasked with managing student loans, faces significant challenges in taking over such a large and complex portfolio. “The SBA stands ready to take the lead on restoring accountability and integrity to America’s student loan portfolio,” said SBA Administrator Kelly Loeffler.
Outside Impact
The transfer of responsibilities could lead to confusion and frustration for millions of student loan borrowers. Experts warn of potential chaos, including long wait times for customer service and a possible spike in loan defaults.
“We are barreling toward another student default crisis with less commitment and capacity to help borrowers repay,” said Peter Granville.
Future Forces
The long-term implications of this move are uncertain. The Trump administration must navigate the complexities of transferring oversight without disrupting critical services. Stakeholders, including educators and student advocacy groups, are calling for a detailed plan to ensure a smooth transition.
“American families and college students need financial aid that is accessible, predictable, and reliable. Creating chaos and uncertainty in the agency that oversees the administration of those funds is not the way to achieve that,” said Beth Maglione, NASFAA’s Interim President and CEO.
Data Points
- March 21, 2025: President Trump signs the executive order to dismantle the Department of Education.
- January 30, 2025: President Trump signs an executive order directing the Education Department to investigate school choice programs.
- $18 billion: Annual Title I funding for elementary and secondary education in low-income areas managed by the Department of Education.
- 1.5 million: Employees at Wells Fargo, compared to fewer than 1,500 employees in the Office of Federal Student Aid (FSA) at the Department of Education.
The dismantling of the Department of Education marks a significant shift in federal education policy, with far-reaching implications for student loan borrowers, special needs programs, and the broader education landscape. As the transition unfolds, stakeholders will be closely watching to ensure that critical services are maintained and that the needs of millions of Americans are not compromised.
