How Gutting Education Department Could Affect Schools, Student Loans

As President Donald Trump explores ways to dramatically shrink the Education Department budget, questions loom about everything from how borrowers will repay their federal student loans to how public schools will be funded.

To be clear, an executive order dismantling the Education Department isn’t among the more than 40 Trump has signed to reshape the federal government, but he quipped to reporters at the White House Tuesday about the first task for Linda McMahon, his nominee for education secretary.

“I want Linda to put herself out of a job,” Trump said.

Trump lacks the full authority to close the agency. Most of its spending — and its very existence — is ordered by Congress. Still, the president has directed his administration to slash spending while pressuring employees to quit.

An executive order in preparation by the White House appears to recognize the limits of the president's power. The planned order would direct his education chief to start winding down the agency but urge Congress to pass a measure abolishing it, sources familiar with the plan told The Associated Press

Below are some possible effects and other things to know.

What Happens To Student Loans?

One of the Education Department’s functions is underwriting the loans that enable millions of people each year to attend college and graduate school. The agency also manages the approximately $1.6 trillion student loan debt portfolio.

About 42 million people nationwide have federal student loans. The loans, underwritten by the Education Department, allow millions of people a year to attend college or graduate school.

Even if the Education Department were eliminated, borrowers would still have to repay their loans, Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt, told NBC News.

The most logical agency to assume management of the debt portfolio would be the Treasury Department, Mayotte said.

Or, the Justice Department or Department of Labor could carry out some Education Department functions, according to a blog post by The National Association of Student Financial Aid Administrators.

Another alternative is privatization of the federal student loan system, which some Republicans have proposed.

“The anxiety levels are pretty high for borrowers right now,” Betsy Mayotte told NBC.

What Happens To Public Schools?

Most public school funding comes from the local level, with the federal government providing an average 13.6 percent of the funding for public K-12 education nationwide in the 2021-2022 school year according to an analysis by USA Facts of data from the National Center for Education Statistics.

Gutting federal funding for public schools would hurt some states worse than others, Kevin Welner, the director of the National Education Policy Center, told Axios.

States with larger numbers of lower-income families that receive higher shares of Title I funding would be hurt the worst, Welner said, noting they “don’t have the same capacity to step in and make up that difference.”

“In wealthier states, we would probably see some reduced spending for students and some increased state allocations,” he said. “In states that are already financially strained, because they just have less wealth, this could result simply in less funding and fewer resources for the students.”

Becky Pringle, the president of National Education Association, said in a post on Blue Sky that students would be directly harmed.

“It will drain resources from the most vulnerable, skyrocket class sizes, make higher ed more expensive, strip special ed services, and gut student civil rights protections,” Pringle said. “We won't let this happen.”

How Are States Reacting?

Trump’s comments at his press conference Tuesday raised alarms among schools and states that rely on federal money.

In Minnesota, Democrats in the state assembly warned about the potential impact on their state. Sen. Mary Kunesh said she was worried the order could disrupt funding and called for more clarity on the plan.

“Imagine if we have billions of dollars frozen at the federal level,” Kunesh said at a news conference. “How are we going to make sure they have the curriculum they have to learn?”

Some Republicans in Minnesota's Legislature said there was no reason to panic without full details of the order.

Those details are expected to be sorted out by Trump's education chief, and the president didn't immediately say whether he would look to preserve the department's core work.

What Happens Next?

Trump campaigned on a pledge to close the department, saying it has been infiltrated by “radicals, zealots and Marxists.” In the nearly five decades since the agency was created, conservatives have made occasional attempts to shut it down, with critics saying it wastes taxpayer money and inserts the federal government into local education decisions.

Trump is expected to give his education chief a deadline to deliver a plan for the agency's wind down. Yet even some of his allies question how far he can go without Congress. Some of the department’s most significant programs are required by federal legislation, including Title I money for low-income schools and federal student loans.

That was a source of frustration during Trump’s first term in office, when his education chief repeatedly sought budget cuts but instead saw Congress increase the agency’s spending each year.=

What's more, Trump's quest to shut down the department could be complicated by his own agenda. Already, he has created new work for the department, including plans to promote “patriotic” education and efforts to go after schools that teach controversial lessons on race and gender. The agency also has opened new investigations into colleges, after Trump ordered a crackdown on campus antisemitism.=

What Trump can actually do to cut spending could be limited to tiny fractions of the budget, according to one source with knowledge of the plan. It would hardly dent the department’s $79 billion annual budget.=

The sources spoke on the condition of anonymity because they weren’t authorized to discuss the plan publicly.

Getting support from Congress would provide another test of Trump’s sway. Some Republicans have raised doubts about the popularity of closing the department or slashing its programs, which support Republican and Democratic states alike.

The House considered amending a bill to close the agency in 2023, but 60 Republicans joined Democrats in opposing it. Last week Rep. Thomas Massie, R-Kentucky, against introduced legislation to close the agency. The one-sentence proposal said the Education Department “shall terminate on December 31, 2026.”

Yet there are signs that Trump is determined to deliver his promise.

Dozens of Education Department employees were put on paid leave on Friday in response to an executive order banning diversity, equity and inclusion efforts in the federal government. Most of the workers don’t work in DEI but had taken an optional diversity course promoted by the department, according to a union that represents department staff. Trump’s order called for government DEI officials to be fired to the “maximum extent allowed by law.”

The White House has also pressured federal workers to quit. Education Department workers were among those who received an offer to leave their jobs by Feb. 6 and receive a buyout worth seven months of salary.

A fresh wave of angst enveloped the agency when a team from Elon Musk’s so-called Department of Government Efficiency showed up at the department’s offices this week. An Education Department spokesperson confirmed a team was on site Monday but did not provide details on the nature of its work. Musk's colleagues have already sought to close the U.S. Agency for International Development and to gain access to sensitive payment systems at the Treasury Department.

The Associated Press contributed reporting.