Yes, Your Student Loans Will Be Impacted By The Mass Department Of Education Layoffs

Earlier this week, the Department of Education announced mass firings of its employees. The dramatic reduction in staff will likely have significant impacts for millions of student loan borrowers in repayment, those who are seeking student loan forgiveness, and college students applying for federal student aid.

Department of Education officials indicated on Tuesday that they had fired more than 1,300 employees. Another roughly 600 employees had been previously laid off or had accepted buyout offers. That represents a reduction of approximately half of the department’s 4,100 total employees.

Secretary of Education Linda McMahon suggested that the reduction in staff would streamline department operations and would not impact student loan borrowers.

“Today’s reduction in force reflects the Department of Education’s commitment to efficiency, accountability and ensuring that resources are directed where they matter most: to students, parents and teachers,” she said in a statement.

The mass layoffs at the Department of Education will not affect a borrower’s student loan repayment obligations. But student loan borrowers will almost certainly be impacted by the staffing reductions. Here’s what borrowers should know.

Department of Education Layoffs Hit Every Department, Including For Student Loans

According to the Department of Education, the layoffs have hit all of its operational divisions.

“All divisions within the Department are impacted by the reduction, with some divisions requiring significant reorganization to better serve students, parents, educators, and taxpayers,” said the department’s statement.

The Office of Federal Student Aid, which oversees and operates the federal student loan system, including repayment programs and student loan forgiveness, was not spared. For student loan borrowers, the impacts could be broad.

The Ombudsman group, which handles often complex administrative issues and disputes between student loan borrowers, the Department of Education itself, and loan servicers, was decimated by the layoffs. The Borrower Defense to Repayment unit, which reviews applications for student loan forgiveness for borrowers who allege they were misled or defrauded by their school, has also been severely diminished. Units within the Office of Federal Student Aid that handle communication with borrowers and stakeholders have also been reduced, as well.

And more changes and reductions to the Department of Education may be coming. This could include reduced funding for FSA call centers, which field calls about student loan forgiveness programs like Public Service Loan Forgiveness or the Total and Permanent Disability discharge program. And it could also impact the operations of department contractors such as student loan servicers, which are already strained by paperwork backlogs and a high volume of phone calls from concerned student loan borrowers.

Taken together, these reductions and changes could have profound impacts for student loan borrowers and college students applying for financial aid. This could mean less communication to borrowers about changes to student loan programs, longer call hold times when trying to reach the Department of Education or a loan servicer (or more dropped calls), longer processing times for the FAFSA and student loan forgiveness and repayment applications, and little or no options if there’s a problem or issue that requires intervention, such as an incorrectly processed FAFSA, an miscalculated monthly payment amount, or an erroneous student loan forgiveness determination.

Advocates Sounds Alarm On Department Of Education Layoffs, Warn Of Impacts For Student Loan Programs

Department of Education officials sought to reassure Americans that student loan and financial aid programs would continue functioning normally.

“The Department of Education will continue to deliver on all statutory programs that fall under the agency’s purview, including formula funding, student loans, Pell Grants, funding for special needs students, and competitive grantmaking,” said the department’s statement.

But student loan borrower advocacy groups immediately began sounding the alarm.

“To be clear, only Congress has the power to abolish the U.S. Department of Education, and poll after poll has shown that the American people do not want to see this happen,” said Student Borrower Protection Center Policy Director Aissa Canchola Bañez in a statement on Tuesday. “These civil servants were working to ensure students and families can pay for college, working to protect students and families from predatory for-profit colleges, and holding servicers accountable for pushing millions further into debt. Today’s announcement makes it crystal clear—President Trump and Secretary McMahon could not care less about making sure students, borrowers, and working families get the support and resources they need, and instead are intent on inflicting mass chaos and disruption across our education system.”

“A reduction in force at the Department of Education, which is the smallest Cabinet-level federal agency, is nonsensical,” said Sabrina Calazans, Student Debt Crisis Center Executive Director on Tuesday. “These job cuts will not create efficiency; they will only harm thousands of federal workers and their families, as well as millions of Americans who benefit from the existence of the Department of Education,”

“We’re particularly concerned with how this move could threaten college students and student loan borrowers,” said Sameer Gadkaree, President of The Institute for College Access & Success, in a statement. “Core functions of the Department could experience outages or breakages, leaving students struggling to get or renew financial aid or campus-based aid. Student loan borrowers, meanwhile, will struggle to access the benefits current law provides. And they can’t be sure they will get reliable, accurate advice on student loan repayment.”

Department Of Education Layoffs Come As Student Loan Forgiveness And Repayment Programs In Turmoil

The Department of Education’s decision to institute mass layoffs comes as student loan borrowers are contending with unprecedented turmoil. Earlier this month, the department blocked access to all income-driven repayment plans, which provide affordable payments to borrowers and a pathway to student loan forgiveness, following a recent court order related to an ongoing legal challenge. All IDR plans, including the Income-Based Repayment plan – which is not being challenged and is not covered by the court order – are impacted. The department has also taken down the online Direct consolidation application.

Last week, President Donald Trump issued an executive order threatening to dismantle elements of the Public Service Loan Forgiveness, or PSLF, program. His order directs the department to draft new regulations cutting off access to PSLF for organizations that engage in certain types of activities. Trump is expected to issue an executive order in the coming days instructing Secretary McMahon to further wind down and dismantle the Department of Education.

“The action comes amidst a wave of changes that have already caused chaos and disruption for millions of families and deprived borrowers of consumer protections and rights they are entitled to under federal law,” said the Student Borrower Protection Center in its statement. “Earlier this month, the Trump Administration intentionally broke the student loan system, cutting off access to all affordable repayment options by removing Income-Driven Repayment (IDR) applications, gutting an array of grant programs, and purging dozens of civil servants, including staff charged with responding to borrower complaints and ensuring defrauded students get relief.”

Some student loan advocacy organizations and labor unions have threatened to sue the Department of Education and the Trump administration over these changes to student loan forgiveness and repayment programs. But lawsuits are rarely resolved quickly, so borrowers may be in for a lengthy period of volatility and uncertainty.