Honestly, the idea of the federal government just "closing" a whole department sounds like something out of a political thriller. But for the last year, it’s been the reality. Since Donald Trump stepped back into the Oval Office, the headlines about Trump cutting Department of Education functions have moved from campaign trail rhetoric to actual, messy policy.
If you’re a parent or a student, you've probably wondered: Does my school just lose its money tomorrow? Do I still have to pay back my student loans? The short answer is that while the building in D.C. might be getting quieter, the programs themselves are currently being shoved into different corners of the federal government.
The Great Reorganization: Where the Money Is Moving
People think "cutting the department" means the money vanishes into thin air. That's not quite what's happening. Because Congress—not the President—created the Department of Education in 1979, Trump can't just delete it with a Sharpie. Instead, his administration, led by Education Secretary Linda McMahon, has been "narrowing the footprint." Basically, they are treating the agency like a failing company and selling off its divisions.
As of late 2025, here is where the big pieces are landing:
- K-12 and Higher Ed Management: These massive portfolios are being shifted to the Department of Labor. The logic? The administration argues school is basically "workforce prep," so it belongs with the jobs people.
- Indian Education: This is moving to the Department of the Interior, which already handles a lot of tribal affairs.
- International Studies: Headed over to the State Department.
- Health and Childcare: Functions like childcare for college-aged parents are going to Health and Human Services (HHS).
It’s a massive bureaucratic shell game. Critics like Miles, the CEO of Education Resource Strategies, argue this "silos" the work. When you fragment programs, you get fragmented results. If a kid is struggling with reading in a Title I school, that used to be under one roof. Now, the money might come from Labor, but the civil rights oversight might still be sitting in a gutted office in D.C.
What About the "Skinny Budget" and School Funding?
You’ve probably heard about the FY 2026 "Skinny Budget." It’s a bold document. In it, the Trump administration proposed cutting $163 billion in non-defense spending. The Department of Education took some of the biggest hits.
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One of the most controversial moves was the total elimination of the Federal Supplemental Educational Opportunity Grant (FSEOG). This was nearly a billion dollars that went to the neediest college students. The administration's take? They say it just encourages colleges to raise tuition and fund "radical leftist ideology."
Then there’s the Federal Work-Study (FWS) program. Currently, it sits at about $1.2 billion. Trump’s proposal involves slashing that by $980 million. The plan is to "return it to the states," which is a phrase you’ll hear a lot. Essentially, the feds want to stop being the middleman.
The Reality of Student Loans and Pell Grants
Here is the part that keeps people up at night. If there's no Education Department, who owns your $1.6 trillion in student debt?
For now, the White House has clarified that the government isn't just walking away from the loan portfolio. They can't. It's a federal asset. Press Secretary Karoline Leavitt confirmed that "critical functions" like Pell Grants and student loan management will remain.
However, the "how" is changing. Through the One Big Beautiful Bill Act passed in mid-2025, the administration has already started:
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- Limiting how much graduate students can borrow.
- Eliminating certain loan forgiveness programs that were popular under the previous administration.
- Shifting the management of these loans, which has led to a lot of "reduction in force" (RIF) layoffs at Federal Student Aid offices.
If you’re a borrower, expect more automation and potentially less "human" help if your servicer messes up. The Office of Federal Student Aid lost nearly half its staff in the March 2025 layoffs.
Special Education: The Line in the Sand?
One area where the administration is trying to calm the waters is Special Education (IDEA). There was a huge panic that kids with disabilities would lose their legal protections.
Lindsey Burke, a key figure in the administration and an author of the Project 2025 education chapter, recently stated that there are "no plans to cut federal funding for special education." In fact, they’ve even floated the idea of increasing it to meet the 40% funding goal the feds have ignored for decades.
That said, the staff that actually enforces those protections was hit hard during the recent government shutdown. They were brought back after a lawsuit, but the office is definitely operating on a skeleton crew.
[Image showing the distribution of federal education funding by program type]
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The "School Choice" Revolution
While some parts of the department are being cut, others are being replaced by entirely new concepts. The One Big Beautiful Bill Act created a national school voucher plan.
Taxpayers can now donate up to $1,700 for scholarships that families use for private schools. This is the "money follows the student" model. To the administration, this is freedom. To public school advocates, it's a "voucher drain" that takes 8% to 10% of local school budgets—the portion that usually comes from federal Title I funds.
Actionable Steps for Parents and Students
The dust is still settling, but you don't have to wait for a 500-page GAO report to protect your interests.
- Check your FAFSA status early. With the staffing cuts at Federal Student Aid, processing times have been... well, a nightmare. Don't wait until the deadline.
- Contact your state's Department of Education. Since the "power is returning to the states," your local state capital is now much more important than Washington D.C. Find out how they plan to handle the block grants that are replacing traditional federal programs.
- Monitor your loan servicer. With the elimination of several forgiveness programs, your repayment plan might have changed. Log in to your portal once a month to ensure no "glitches" have moved you into a different tier.
- Watch local school board meetings. As federal "Title I" money (for low-income schools) gets converted into no-strings-attached grants, your local board will decide if that money goes to teacher salaries or new private school vouchers.
The Department of Education might be getting smaller, but the impact on your wallet and your kid's classroom isn't going away. It’s just moving to a different office.