When the U.S. Department of Education announced on Tuesday that it was eliminating nearly half of its staff, it said that it would “continue to deliver on all statutory programs that fall under the agency’s purview,” including Pell Grants and student loans.
As news of the job cuts circulated on Tuesday night and Wednesday, experts wondered how to square that assurance with their knowledge of the work it takes to get federal financial aid into students’ accounts.
“Claiming that eliminating half the Department won’t affect its services — without any clear plan to redistribute the workload — is, at best, naive and, at worst, deliberately misleading,” said Beth Maglione, interim president and chief executive of the National Association of Student Financial Aid Administrators, in a public statement on Wednesday. “It also raises serious concerns about how billions of dollars in federal student aid will continue to be disbursed to students without interruption.”
“If there is a plan to reassign or redistribute the work of hundreds of federal employees to prevent disruptions for students and families,” the statement goes on to say, “we strongly urge the administration to share it without delay.”
NASFAA is not alone in its lack of confidence that the administration has a plan, and in its alarm about the consequences of the department’s staff reduction.
“As expert commentators, as people who work in this area, we never want to unnecessarily panic students and families about financial aid, because we know everybody is so on edge, and these are such consequential programs for millions of families around the country,” said Judith Scott-Clayton, a professor of economics and education at Columbia University’s Teachers College. “These programs are legislated by Congress. They are not things that can be legally stopped by the administration.
“That being said, as somebody working in this area, as an expert working on financial aid, I am panicked about what is going on.”
Federal Student Aid, the arm of the department that manages Title IV programs, took a hit in the job cuts, Scott-Clayton noted. It remains unclear precisely how many members of what was a 1,440-person office as of September have now been let go. Figures from the American Federation of Government Employees Local 252 indicate that 326 union members were cut from FSA; the union represented roughly two-thirds of staff agencywide.
And while the work of processing millions of financial-aid applications and distributing millions of grants and loans could be made more efficient, it “doesn’t happen magically.” It all requires the work of people; and without enough of them, things will start to break.
That, Scott-Clayton said, could lead to delays and mistakes. And therein lies the source of her panic: “Maybe breaking these programs is not an unfortunate side effect that might happen. It’s actually the intended goal, to cause disruption.”
Kim Cook, chief executive of the National College Attainment Network, worries that students and families might be hearing something even more dire: that the department is being shut down, “which is the message outside the Beltway.” As a result, “we think it’s very important to tell students who are receiving or applying for federal student aid that things like FAFSA [the Free Application for Federal Student Aid] remain open and running, that Pell Grants are still being disbursed.”
On Wednesday afternoon, NASFAA posted on X that it was hearing reports of glitches with the financial-aid application. The extent and cause of the issues were not yet clear.
Many observers in and around higher ed were already watching this financial-aid cycle closely given the disastrous rollout of an updated application form last year. “We saw what happened last year when there was an unreliable FAFSA,” Cook said. “FAFSA completion by high-school students went down 10 percent. So we’re watching carefully to make sure that that system remains reliable and that the support ecosystem of a call center, of training for practitioners, that all of those things continue to support the rebound we need to have in FAFSA completion this year.”
FAFSA completion is crucial for colleges. Students who apply for aid are more likely to enroll, noted Samantha Hicks, assistant vice president for financial aid and scholarships at Coastal Carolina University, and she conveyed the message that people in her profession were ready to help. “My staff is working very diligently to encourage FAFSA form submission,” she said. For financial-aid professionals like her, Hicks said, “change is our new normal.” Her office and its counterparts around the country, Hicks said, will be ready to help students and their families if they have additional questions, or more trouble getting through on the department’s help line, for instance.
‘The Work is Invisible’
Widespread cracks in the federal-aid system may not become evident right away.
At this point in the calendar, most prospective students have probably already filed the FAFSA, noted Edward Conroy, a senior policy manager on the higher-education policy team at New America, a think tank. But the process doesn’t always end there, he said, and problems caused by the staffing cuts could still arise. Students whose financial circumstances have changed, perhaps because of a parent losing a job, go through an appeal process. Colleges collect those changes and send them in batches to the department, which revises the data used to calculate students’ aid awards.
“I think people assume that a lot of IT systems sort of run on autopilot,” Conroy said. “But if something is wrong with the code, or somebody makes an error with an update, and there’s no longer enough people watching to make sure that those errors get fixed, then we can start to see problems.”
Conroy drew an analogy to Y2K, when fears rose of widespread problems as dates used in computer systems moved from 1999 to 2000. “Y2K has become this kind of joke, that, well, nothing happened,” he said. “But nothing happened because lots of IT people spent a lot of time working really hard to do a lot of work to stop something bad from happening. Many government functions, like FAFSA, like disbursement of aid, are very similar. When things are going right, the work is invisible. And people will only start to notice when the staff are not there to do things and stuff starts to break.”
Colleges disburse financial aid throughout the year, especially at community colleges and in support of summer courses. But the peak times are at the start of the fall and spring terms — and that’s when the staffing cuts might cause problems, Conroy said. The general process is that colleges request the funds from the department a few days before applying it to student balances (or providing a credit to students for covered living expenses) shortly before classes begin.
This is going to create ripple effects for years. It’s going to take years to rebuild.
In a typical year, that process is delayed for some fraction of a college’s students, who might have missed a piece of paperwork along the way, said Conroy, who worked in outreach and communications in the aid office of the University of California at Los Angeles before moving into education policy. Colleges can grant this small number of students an extension or put them on a payment plan. At UCLA, he said, that might happen for 1,000 out of 30,000 students, some 22,000 of whom got federal aid. Perhaps tens of those students, maybe hundreds at a very large college, would run into such trouble that they could not begin classes as planned.
Dealing with a more widespread delay in the disbursement of aid, should one materialize, “would put colleges in an incredibly difficult position,” he said.
Another concern is what the cuts might mean for borrowers. Student-loan repayment was already at a pivotal moment, said Sarah Sattelmeyer, project director for education, opportunity, and mobility at New America. Borrowers were given a pause on repayment because of the pandemic, which was followed by a Biden administration “on-ramp” with extra protections from the worst consequences of defaulting on their loans. That ended in late 2024.
Meanwhile, she noted, borrowers’ ability to enter income-driven repayment is on temporary hold while a court case about loan forgiveness proceeds.
Put that all together and there are a lot of borrowers who are likely to have questions and need support to figure out how to manage their loans. Much of that support is provided by contractors, Sattelmeyer said — but those contractors still need to be overseen by departmental staff, who also provide resources to borrowers.
Nick Hillman, a professor in the School of Education at the University of Wisconsin at Madison and director of its Student Success Through Applied Research Lab, is also worried about how the cuts might make it harder for borrowers to get the support they need. And, he added, if Congress takes action on a policy proposal to create a new income-driven loan-repayment plan, the department will need to be staffed to implement it.
Cutting staff in the name of efficiency, Sattelmeyer said, is likely to have the opposite effect. “Without those resources,” she said, “students and borrowers are going to face severe financial consequences that are going to affect the economy in other ways.”
The full picture of what all has been cut at the department is still emerging. “A lot of these programs are interlocking,” Sattelmeyer said. “There are people who perform functions across the agency, like making sure that good information is on the website to help borrowers and students.”
“I think it’s not just about today,” Sattelmeyer added. “This is going to create ripple effects for years. It’s going to take years to rebuild.”
Dan Bauman and Rick Seltzer contributed to this report.
