Honestly, the headlines are a mess. If you’ve spent any time on social media lately, you’ve probably seen conflicting reports about the Department of Education (ED) being "deleted" or "abolished" overnight. One minute it’s gone, the next minute someone is telling you it’s just a reorganization. It is confusing.
The truth is somewhere in the middle, and it's happening faster than most people expected. As of early 2026, the Department of Education isn't a single building you can just lock the doors on. It’s a massive web of funding, civil rights enforcement, and a $1.6 trillion student loan portfolio. You can't just delete that with a keystroke. But the Trump administration is currently pulling the thread to see how much of the sweater stays together.
The Dismantling Has Already Started
This isn't just a "plan" anymore. It's active.
Starting the week of January 20, 2026, staff from the Higher Education Programs (HEP) division are being detailed to the Department of Labor. This isn't just a desk change. Grantees are being moved to the Labor Department's payment systems. Basically, the administration is "outsourcing" the department to other agencies.
Last year, Secretary Linda McMahon initiated a massive reduction-in-force (RIF). We’re talking about roughly half the department’s staff being cut. When you lose half your people, you can't run the same programs. That’s why we’re seeing these Interagency Agreements (IAAs). They are moving the furniture to other rooms before they tear down the walls.
- Title I and K-12: The Labor Department is now overseeing the $18.4 billion Title I program. This is the money that goes to low-income schools.
- Native American Education: These programs have been moved over to the Department of Interior.
- Child Care for Students: This now lives under Health and Human Services (HHS).
The strategy is clear: if you move all the functions elsewhere, the Department of Education becomes an empty shell. At that point, closing it is just a formality.
What Happens to Your Student Loans?
This is the big one. Most people don't care about the bureaucracy; they care about their monthly payments.
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Under the "One Big Beautiful Bill" Act (OBBB), which passed last summer, the entire student loan landscape is shifting on July 1, 2026. If you're a new borrower, your options are getting slashed. We’re moving from a dozen different plans to just two: a new standard plan and the Repayment Assistance Plan (RAP).
The Graduate School Hit
If you were planning on a Grad PLUS loan for 2026, you might want to sit down. Those are being eliminated for new borrowers. The administration is also putting hard caps on how much graduate students can borrow. The days of "unlimited" federal funding for a PhD or Law degree are basically over.
The Default Reversal
Here’s a weird twist: just this week, on January 16, the administration did a total 180 on wage garnishment. They were going to start seizing paychecks for defaulted borrowers, but they’ve paused that. Why? Because they need time to implement the new "One Big Beautiful Bill" reforms. It’s a temporary breather, not a permanent pass.
The Legal War in the States
You didn't think this would happen without a fight, did you?
California Attorney General Rob Bonta, along with a coalition of other states like New York and Massachusetts, is suing. They argue that Secretary McMahon doesn't have the legal authority to just "give away" programs that Congress specifically assigned to the Department of Education.
The argument is basically: Congress made this department. Only Congress can kill it.
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But the Supreme Court's recent moves have weakened the "Chevron deference," which used to give federal agencies a lot of leeway. Now, the courts are much more skeptical of what agencies can do without explicit permission. This legal battle is likely going to go all the way to the top, and in the meantime, schools are left in a "federal limbo."
Money: The "Skinny Budget" of 2026
The FY 2026 budget proposal is a gut-punch for some. The administration is asking for a $12 billion reduction in education funding.
The Pell Grant—the lifeline for millions of low-income students—is on the chopping block. The proposal seeks to cut the maximum award by nearly $1,700, bringing it down to $5,710. That’s a 23% drop. For a student at a state school, that’s the difference between staying in class and dropping out to work full-time.
They’re also looking to kill the Federal Supplemental Educational Opportunity Grant (FSEOG) entirely. The administration's logic? They claim these grants "fund radical leftist ideology." Whether you agree with that or not, the result is the same: less cash for students.
Can They Actually Close It?
Honestly? It's tough.
To officially "abolish" the Department of Education, you need an Act of Congress. Even with a Republican-controlled House and Senate, getting 60 votes in the Senate to overcome a filibuster is a massive hurdle. Some Republicans from rural districts are also nervous. They rely on that federal "Impact Aid" and Title I money to keep their local schools running.
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What's more likely is a "hollowed-out" department. It might still exist on paper, but if the staff is gone and the programs are being run by Labor and Interior, does the name on the door even matter?
How to Prepare for the Shift
If you’re a parent, student, or educator, you can't just wait for the news to settle. You have to move now.
For Students and Borrowers:
- Check your repayment plan. If you are on the SAVE plan (which is currently tied up in litigation), start looking at the RAP plan requirements. You’ll likely be transitioned there by 2028 anyway.
- Max out your 2025-2026 FAFSA. Do it early. With the Pell Grant cuts looming for the following year, you want to secure every cent you can under the current rules.
- Rethink Grad School debt. If Grad PLUS loans disappear in July 2026, you’ll be looking at private lenders with much higher interest rates. If you're going to borrow, do it before the deadline.
For K-12 Parents:
Keep an eye on your local school board. As federal "categorical" grants (money for specific things like literacy) get rolled into "block grants," your state has more power. That means the battle for school funding is moving from Washington D.C. to your state capital. If you want to see money for special education or arts, you have to lobby your governor, not just your congressman.
For Educators:
Expect more paperwork in the short term. Transitioning from the ED's systems to the Labor Department's "Grant Solutions" is going to be a technical nightmare. If your district relies on federal funds, make sure your administrative team is already talking to their counterparts at the Department of Labor.
The Department of Education might not be "gone" by the end of 2026, but it will be unrecognizable. The era of the federal government as the primary "watchdog" for schools is ending, and the era of state-led, workforce-focused education is taking its place. It’s a massive gamble, and we won’t know if it paid off until this year’s freshmen graduate into a very different world.