The Department of Education may soon lose key functions pending President Donald Trump’s efforts to close the agency for good. Last week, he announced plans to move the student loan portfolio to the Small Business Administration beginning “immediately.”
To better understand the size and scope of the administration’s agenda, it’s important to know what the department is responsible for in terms of spending. Here’s a look at that data.
In fiscal year 2024 alone, the net cost to operate the department was more than $218 billion, according to an analysis from the Pew Research Center. Net outlays, a similar metric that incorporates certain accounting adjustments, totaled $267.9 billion that same year.
Those figures are significantly lower than FY2022 when the Biden administration expanded student loan forgiveness programs. During that period, net cost operations for 2022 reached nearly $600 billion, falling sharply in FY2023 after the courts struck down many of those initiatives.
In grants to K12, the department’s spending totaled more than $150 billion in FY2024, according to its annual financial report.
The department also provided $260 million in 2024 through its research arm, the Institute of Education Sciences. However, President Donald Trump has already scrapped about $900 million in IES contracts, some of which cover multiple years.
Specific to higher education, the most prominent role the department plays is facilitating student financial aid through loans, grants and federal work-study. Its student loan portfolio stood at $1.47 trillion at the end of fiscal year 2024.
Here’s a look at how much money was disbursed to students through various means of financial aid last fiscal year.
- Loans: $85.8 billion to 6.7 million people
- Grants: $33.9 billion disbursed to 6.3 million people
- Federal Work Study: $1.1 billion to around 600,000 people
- Total: $120.8 billion to around 13.6 million people
The amount of money disbursed has increased in recent years. For example, the amount of grants disbursed in fiscal year 2017 was $27.7 billion to 8.3 million people.
Potential ramifications of the Department of Education closing
Nearly half (45%) of U.S. adults had an “unfavorable opinion” of the Department of Education, according to another recent Pew survey. It was the third-least popular federal agency behind the Department of Justice and Internal Revenue Service.
Policymakers may not understand the ramifications of shifting the department’s various functions to other federal agencies, leaders from the American Council on Education suggest. Moving Federal Student Aid to the Department of Treasury is “like merging Chase, Wells Fargo, Bank of America and Capital One all at once,” said president Ted Mitchell in a recent dotEDU Live webinar.
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“The systems and operational style are different and we’re going to see this again and again. That’s where our students and institutions are going to be hurt.”
Within a day of mass layoffs announced at the Department of Education, hundreds of people using the FAFSA portal experienced interruptions, AP News reports.
The consequences extend far beyond the numbers, seeing that the Department also oversees civil rights complaints, advocacy for marginalized students and education statistics, said Johnathan Fansmith, assistant vice president of government relations at the American Council on Education.
“You’re changing the entire focus of people that solve a lot of problems before they occur, which you lose in these kinds of moves.”
“Once you stop, not only is it hard to restart; you’ve lost the careful collection of longitudinal data,” Mitchell said on the gutting of the Institute of Education Sciences. “We’re blinding ourselves.”
