The Department Of Education May Shut Down In Two Weeks, And Student Loan Programs Could Suffer

The Threat to the Department of Education: What It Means for Student Loan Borrowers

President Donald Trump has recently called for the elimination of the U.S. Department of Education, a move that could have profound implications for millions of student loan borrowers. While the department was established by Congress in 1979 under President Jimmy Carter, Trump is exploring ways to dismantle it through executive action. However, most legal scholars agree that Trump cannot simply abolish the department through an executive order, as it would require an act of Congress to do so. Despite this, the Trump administration is already taking significant steps to weaken the department from within, raising concerns about the future of federal student loan programs.

One of the most immediate effects of this dismantling is the reduction in staffing at the Department of Education. The administration has already offered buyout packages to employees, with over 100 staffers at the Office of Federal Student Aid (FSA) accepting offers last month. This represents a 10% reduction in FSA staff, including key personnel in the Borrower Defense to Repayment unit and the Ombudsman Group, which handle critical tasks such as reviewing applications for student loan forgiveness and investigating disputes related to repayment programs. More significant staffing cuts may be on the horizon, with the department offering incentives of up to $25,000 for employees to leave their jobs.

The consequences of these cuts are already being felt by student loan borrowers. The FSA, which oversees the federal student loan system, is responsible for managing repayment and forgiveness programs. With fewer staff members, the department is struggling to keep up with the demand for services, leading to longer hold times, dropped calls, and website problems. For example, borrowers attempting to navigate the complex process of income-driven repayment (IDR) plans or Public Service Loan Forgiveness (PSLF) are facing significant delays and disruptions. Advocates warn that further reductions in staffing and funding could essentially bring the system to a breaking point.

The Broader Implications of a Government Shutdown on Student Loan Programs

The situation could become even more dire if the federal government shuts down in the coming weeks. Congress is currently at an impasse over government funding, with Republicans and Democrats unable to agree on a spending bill. While Republicans control both the House and the Senate, their narrow majorities mean they may need Democratic support to pass a funding bill. Democrats are insisting that any spending bill include language binding the Trump administration to Congress’s funding directives, a move they see as necessary to prevent Trump and his Department of Government Efficiency (DOGE) from unilaterally cutting federal programs. However, Republican lawmakers are refusing to include such language, increasing the likelihood of a shutdown.

If the government shuts down, the Department of Education would be directly impacted. Non-essential staff would be furloughed, while essential employees would be required to work without pay. This would further strain an already overwhelmed federal student loan system, leading to even longer hold times, more extensive processing delays, and other disruptions. Borrowers who rely on the department for loan forgiveness, repayment plans, and other services could face significant challenges, with the potential for long-lasting backlogs. The longer the shutdown lasts, the more likely it is that these problems will persist, even after funding is restored.

The government shutdown could also accelerate the decline of the Department of Education by prompting more employees to leave their jobs voluntarily. With the department already offering incentives for staffers to depart, a shutdown could push even more workers to seek employment elsewhere. This would leave the department with even fewer resources to manage the federal student loan system, potentially leading to a permanent decline in its ability to serve borrowers.

Student Loan Borrowers Face Increasing Disruptions Due to Department of Education Actions

The erosion of the Department of Education’s operations could not come at a worse time for student loan borrowers, who are already experiencing significant disruptions. Last week, the department shut down application processing for income-driven repayment (IDR) plans in response to a recent court order related to an ongoing legal challenge. IDR plans allow borrowers to make affordable monthly payments based on their income and family size, with the promise of eventual loan forgiveness after 20 or 25 years of qualifying payments. The shutdown of IDR processing will have major impacts for millions of borrowers, forcing many into unaffordable repayment plans or costly forbearances, while halting progress toward loan forgiveness.

Other federal student loan programs are also facing challenges. The Total and Permanent Disability (TPD) discharge program, which provides complete loan forgiveness for borrowers with severe medical impairments, has been paused since January as the department undergoes a significant servicing platform transition. The program was expected to reopen this spring, but continued cuts to department funding and staffing, coupled with the possibility of a prolonged government shutdown, may impact that timeline and borrowers’ ability to get their loans discharged. Additionally, processing for other student loan relief programs, such as Borrower Defense to Repayment and PSLF Buyback, has been slowed by major delays that are unlikely to improve anytime soon.

The Role of Staffing Cuts and Service Reductions in Exacerbating the Crisis

The Trump administration’s efforts to dismantle the Department of Education from within are not limited to staffing cuts. Officials are also eyeing major cuts to department services and operations, including slashing student loan servicing contracts, decreasing call center hours, and halting planned improvements to the department’s StudentAid.gov website. These proposals could further exacerbate the challenges faced by student loan borrowers, who already experience long hold times, dropped calls, and website problems when trying to access assistance.

The reduction in staffing at the Office of Federal Student Aid has already had a significant impact on the department’s ability to manage the federal student loan system. With fewer employees to handle the day-to-day operations of running the system, borrowers are facing longer delays and more difficulties in getting their questions answered. The situation could become even more dire if the government shuts down, as essential staff would be required to work without pay, leading to further disruptions in service. The combination of staffing cuts, service reductions, and the possibility of a shutdown creates a perfect storm of challenges for student loan borrowers.

The Confirmation of Linda McMahon as Secretary of Education: What It Means for the Future

On Monday, the Senate voted to confirm Linda McMahon as Secretary of Education, a move that could have significant implications for the future of the department and its student loan programs. McMahon, a former WWE executive and philanthropist, has promised to uphold key federal student loan forgiveness programs authorized by Congress, such as PSLF and IDR. However, she has also pledged to enact Trump’s agenda for the Department of Education, which includes significant cuts to staffing, funding, and services.

While McMahon’s confirmation may provide some stability to the department, her commitment to Trump’s agenda raises concerns about the future of federal student loan programs. The administration’s efforts to dismantle the department from within, combined with the possibility of a government shutdown, create a challenging environment for student loan borrowers. As the department continues to face staffing cuts, service reductions, and political uncertainty, borrowers may find it increasingly difficult to access the help they need to manage their loans and pursue forgiveness.

Conclusion: The Uncertain Future of the Department of Education and Its Impact on Student Loan Borrowers

The future of the Department of Education and its ability to manage federal student loan programs is increasingly uncertain. While Trump’s call to eliminate the department outright may not come to fruition, his administration’s efforts to dismantle it from within are already having a profound impact on borrowers. The reduction in staffing, funding, and services at the department is leading to significant disruptions in the federal student loan system, with borrowers facing longer hold times, processing delays, and challenges in accessing forgiveness and repayment programs.

The possibility of a government shutdown could further exacerbate these challenges, leading to even longer delays and more extensive disruptions. With the department’s operations already strained, the shutdown could push the system to the brink, leaving borrowers with few options and little support. As the situation continues to unfold, it is clear that the Trump administration’s actions will have far-reaching consequences for student loan borrowers, who may be forced to navigate an increasingly complex and unstable system.