Navigating announced changes at the Department of Education

NBC 5 Responds is following multiple developments at the Department of Education. Read on for what students and borrowers should know right now.

AN OVERVIEW

There are key changes to understand - in addition to President Trump’s executive order calling for the elimination of the U.S. Department of Education.

In March, the agency announced cutting around 1,300 employees, roughly half the agency’s workforce. In the announcement, the education department said administrative leave for impacted employees would begin on Friday, March 21.

Separately, an ongoing legal battle over student loan debt relief led the Department of Education to suspend access to income-driven repayment plans and online loan consolidation applications earlier this year.

EO IMPACTS?

When it comes to the executive order, a president cannot unilaterally abolish a federal agency without the approval of Congress.

“With respect to the executive order, there are no short-term immediate impacts of that,” said Jill Desjean, director of policy analysis at the National Association of Student Financial Aid Administrators.

“That executive order is instructing the secretary of education to develop a plan for how the programs and functions that are currently administered by the Department of Education would be handled should Congress eliminate the Department of Education,” Desjean explained.

In a statement on the Department of Education’s website, Education Secretary Linda McMahon writes, in part, that it would continue to “support college student borrowers and others who rely on essential programs.”

It didn’t include details, but Desjean explained she doesn’t expect student aid programs or federal student loans to see immediate changes for borrowers and students because of the executive order.

“The Federal Student Aid programs are authorized entirely separately from the existence of the Department of Education. So, there can be a Pell Grant without a Department of Education. There can be a student loan program without the Department of Education,” Desjean said.

STAFF CUTS

Desjean said borrowers could see an impact from the reduction in workforce at the agency.

“The question students are having, is the person that was supposed to do x still there? Financial aid administrators have those same questions because we rely on the Department of Education to answer our questions and to get things done,” said Desjean.

Borrower Jasmin Flores of North Texas said she is in the pipeline to consolidate her federal student loans. She said she’s not sure what’s next for the application she submitted at the start of the year.

“I received notice that it was in progress, but with the announcement there are so many cuts happening and federal workers being laid off, I don’t even know if there is anybody there to process my application anymore,” said Flores.

When it comes to federal student loans, they are still available. The federal government contracts with loan servicers are listed online. Desjean explained borrowers would continue to contact their loan servicers with day-to-day questions.

INCOME-DRIVEN PLANS

In February, we told you about the latest turn in court battles over student loan debt relief. A banner on federal studentaid.gov said a federal court injunction stops the Department of Education from implementing the Saving on a Valuable Education, or SAVE plan, and parts of other income-driven repayment plans. Online IDR and loan consolidation applications are temporarily unavailable, according to the update.  

In an email to NBC 5 Responds on Friday, March 21, a Department of Education spokesperson wrote a court injunction prevented the DOE from implementing the Biden Administration’s SAVE Plan and part of other income-driven repayment plans. The spokesperson said the department is working to ensure the programs follow the court’s ruling. It anticipates the revised form, allowing borrowers to change repayment plans, would be available as soon as this week.

Borrower Megan Sotelo-Padilla, who works in education, said she is currently in the SAVE plan.

“I’ve been trying to do my own homework,” Sotelo-Padilla said of recent developments.

She said she worries others may make critical choices based on incomplete or bad information.

“A lot of the discourse that seen online is people saying, if they dissolve the Department of Ed, I'm not paying my loans because I don't owe them anymore. Of course, that's probably not gonna be the case,” Sotelo-Padilla said.

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