The Department of Education recently announced that it would be offloading several key programs—including over $3 billion in federal grants—to other departments as it inches closer to eliminating itself entirely. The move follows significant cuts to its workforce earlier in the year as it works to fulfill an executive order in March that called for shuttering the department. While Congress ultimately has the power to close ED, the Department does have the authority to outsource some of its responsibilities. Most of them are being diverted to Labor, including Title I and TRIO, which provide funding to improve outcomes for students from low-income backgrounds from elementary through higher education.
While some of higher ed’s funding sources have been shuffled around, Federal Student Aid remains at the Department of Education. Secretary of Education Linda McMahon has called the outsourcing a “proof of concept,” and just one step along the path toward closing the Department for good. Exactly how that will impact federal borrowers, however, remains unclear. The Administration has talked about selling parts of the federal student loan portfolio, for example, but experts believe that would cause myriad logistical and legal complications. If the recent lawsuits over newly imposed limitations to Public Service Loan Forgiveness are any indication, we can expect staggering legal challenges.
At present, the reshuffling at the Department of Education should have no impact on student loan borrowers. As with the recent government shutdown, programs that funnel aid to college students should continue functioning as usual. Likewise, for borrowers in repayment, the current shakeup doesn’t impact your ability to repay your loans, consolidate, request forbearance, or anything else. With the office of Federal Student Aid remaining at ED, the student loan system remains unaffected.
As always, Navigate will continue to monitor information about changes at ED and FSA and notify you of any changes to federal policy. If you have any questions, we are always here to help out and keep you up-to-date on the shifting student loan landscape.
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