Colleges and universities are already experiencing the fallout from deep staffing cuts at the Department of Education, including delays in financial aid processing, limited compliance support, and a slowdown in civil rights enforcement. Now, with the Supreme Court clearing the way for additional layoffs and the passage of the expansive One Big Beautiful Bill, the department is being tasked with doing more for students and institutions while operating with significantly fewer resources.
The Supreme Court on July 14 lifted an injunction blocking the Trump administration from carrying out mass layoffs at the Department of Education, cuts that began in March and contributed to a steep reduction in the agency’s workforce. The department now has around 2,000 employees, down from roughly 4,000 at the start of the year. The reductions have affected every major function, including financial aid operations, civil rights enforcement, and education research.
“If the cuts go through the way they are planned, higher education will largely be flying blind,” ACE President Ted Mitchell told Inside Higher Ed. He raised particular concern about the hollowing out of the Institute for Education Sciences and the National Center for Education Statistics, which are responsible for collecting and analyzing the data needed to evaluate student outcomes. “We won’t know what programs and interventions will work to improve student success at the very moment when higher ed is facing a crisis of confidence about whether it is doing the right thing for students.”
Campuses are already reporting serious disruption. In a NASFAA survey from May, nearly 60 percent of institutions said they had experienced a drop in agency responsiveness, and more than a third reported gaps in support following the closure of their regional Federal Student Aid office. Some are struggling to recertify programs or address compliance questions, basic processes that now take far longer or receive no response at all.
New Law Expands Department’s Responsibilities
Even as it moves to reduce the Department of Education’s footprint, the Trump administration has tasked the agency with carrying out one of the most expansive higher education laws in decades. Under the One Big Beautiful Bill, the department must implement a sweeping set of new mandates, including:
- Replacing all existing federal student loan repayment plans with two new options for borrowers taking out loans after July 1, 2026
- Expanding Pell Grant eligibility to short-term postsecondary training programs lasting between eight and 15 weeks
- Creating a new accountability system that ties student loan eligibility to program-level earnings after graduation
Some provisions are already taking effect. In a July 18 Dear Colleague Letter, the department confirmed that several student loan changes—including new borrower benefits and institutional reporting requirements—are effective immediately upon enactment.
A number of these provisions requires significant new infrastructure, data systems, and oversight—ironically, at the very moment the agency is losing much of the staff needed to carry them out, USA Today noted. Colleges will be expected to submit detailed program-level data, while the department must coordinate with the IRS, the U.S. Census Bureau, and state agencies to assess outcomes and determine federal aid eligibility.
“You can definitely anticipate a lot of problems,” Jon Fansmith, ACE’s senior vice president for government relations and national engagement, told the paper.
Restructuring and Interagency Shifts Raise Concerns
The department also has begun shifting responsibilities to other agencies. In mid-July, it announced an agreement with the Department of Labor to transfer oversight of several programs—including adult education, family literacy, and career and technical education—to Labor. Other potential agency transfers are under discussion, including moving student loan operations to the Treasury Department or the Small Business Administration.
Meanwhile, civil rights enforcement is slowing significantly. According to the Associated Press, the Office for Civil Rights (OCR) has resolved far fewer cases than in previous years despite an increase in new complaints. A June court order pausing some OCR terminations described the office as “currently incapable of addressing the vast majority” of complaints.
In addition to shifting entire programs to other federal departments, the Education Department recently took a step that could affect how students access certain federal benefits. On July 11, the department issued a notice of intent in the Federal Register announcing that it is working with the Department of Health and Human Services to clarify which education-related benefits are considered “federal public benefits” under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
While the notice does not propose any immediate policy changes, it signals that the administration may seek to redefine eligibility criteria for benefits such as federal student aid and educational grants. The notice says the effort aims to standardize benefit eligibility processes and improve administrative alignment across federal agencies.
This development has raised concerns among advocates who fear that redefining these benefits could restrict access for some student populations, particularly those with uncertain immigration status or who rely on multiple federal supports.