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In a significant move toward dismantling the Education Department, the agency has taken a major step following President Trump’s directive a year ago to close it down. On Thursday, the department revealed plans to transfer its massive $1.7 trillion student loan portfolio to the Treasury Department. This development is the latest in a series of strategic interagency collaborations aimed at relocating programs from the Education Department, which can only be officially abolished through congressional action.
Education Secretary Linda McMahon emphasized the benefits of this transition, stating, “By tapping into Treasury’s renowned expertise in finance and economic policy, we are confident that American students, borrowers, and taxpayers will finally benefit from well-functioning programs after years of mismanagement.”
President Trump, on March 20, 2025, signed an executive order directing McMahon to effectively eliminate her own position, insisting that all non-essential programs at the Education Department be terminated.
In his announcement, Trump assured that the critical functions of the department, such as Pell Grants, Title I funding, and programs for students with disabilities, would be “fully preserved” and reassigned to other agencies and departments, ensuring their continuation and effectiveness.
“The department’s useful functions … will be preserved, fully preserved,” he said at the time, referring to Pell Grants, Title I funding and programs for students with disabilities. “They’re going to be preserved in full and redistributed to various other agencies and departments.”
“But beyond these core necessities, my administration will take all lawful steps to shut down the department. We’re going to shut it down and shut it down as quickly as possible,” he added.
The result has been the layoff of thousands of employees, delays in federal investigations and multiple programs moved to other federal agencies, the most substantial being Thursday’s student loan shift to Treasury, a move that drew immediate pushback from advocates.
“Student loan borrowers are entitled to unique and important rights under the Higher Education Act — which has too often been denied as a result of incompetence and corruption. Policymakers should have major concerns about this transfer and how it will exacerbate borrower confusion and push relief further out of reach,” said Aissa Canchola Bañez, policy director for Protect Borrowers.
The administration’s efforts against Education started quickly with the layoff of half the department’s employees, a move that was challenged but upheld by the Supreme Court.
The layoffs greatly affected the operations of several key divisions, including the Office of Civil Rights, the Institute of Education Sciences and the Office of Federal Student Aid.
The hit was too much for some programs to bear, and the Office of Civil Rights, which has a reported 25,000 and 7,000 open investigations under its purview, was among those that had to hire some workers back.
“I think the slowing down of cases within the Office of Civil Rights is definitely a top concern. I mean, we know that even prior to this administration, the Office of Civil Rights has not had quite enough staff to really maintain all of the cases that they have, and we’ve had an increase in cases,” said Paige Shoemaker DeMio, senior policy analyst for K-12 Education Policy at the Center for American Progress
But the Education Department contends it is cutting red tape and bureaucracy, giving more power to the states through its actions.
“One year ago, President Trump signed one of the most consequential executive orders of his presidency to end the failed federal experiment with a cabinet-level Department of Education in order to return education to the states. Over the past year, we have made unprecedented progress on this mandate, a longstanding goal of those who believe education is best when it is situated closest to students and families,” McMahon said.
Recently, the department began giving waivers to states that offer more flexibility in how certain federal money is spent. They allow states to sidestep certain costly reporting requirements and provide a block grant they can use for any education costs.
The most direct effort to date to dismantle the department has been the signing of interagency agreements allowing it to move some of its responsibilities, such as the Office of Elementary and Secondary Education and postsecondary education programs, to other federal agencies.
Thursday’s agreement is the biggest to date, allowing the Treasury to take over the “operational responsibility for collecting on defaulted Federal student loan debt and provide.” The ultimate goal of the agreement is to get the whole $1.7 trillion student loan portfolio out of the Education Department.
“I think the interagency agreements, of course, are the headline, and because these show that the department can partner with other federal agencies to operate programs that should continue even when the Department of Education closes. I think these agreements are the nuts and bolts of the policy process that really makes it easier for Congress to consider proposals that would unwind the Department of Education from federal law,” said Jonathan Butcher, acting director for the Center for Education Policy at the Heritage Foundation.
Only lawmakers could definitively shutter the Cabinet agency, and even some Republicans are skeptical of such a push, which is opposed by a majority of voters.
But with the student loan agreement, Congress may not be able to ignore the issue much longer.
“We call on Congress to engage in critical oversight and demand information on how the Trump Administration will guarantee that the Treasury is equipped with the staff and expertise necessary to support our most vulnerable borrowers and ensure they are able to access the rights afforded to them under the Higher Education Act. Until this is done, the Trump Administration must continue to halt its forced collections machine. For too long, borrowers have been failed at every turn — they don’t deserve to be failed again by an agency that isn’t ready to protect them,” said Bañez, the student loan advocate.
Even without a formal decree to end the agency, experts say it could be years before the department looks the same as before the Trump administration, if another president takes on the task of rebuilding it.
“What we’re seeing right now is a generational change. I think it will be, could very well be, decades before there’s a sufficient return to the levels and kinds of activity and federal assistance and role in education that we were accustomed to until January 2025,” said Robert Kim, executive director of the Education Law Center.