The Trump administration is speeding up its push to break apart the U.S. Department of Education, shifting billions of dollars in federal school funding to other agencies — but keeping the government’s $1.6 trillion student loan system under the department’s control, at least for now.
Under a series of newly signed agreements, major K-12 and higher education grant programs will be moved to the Departments of Labor, Health and Human Services (HHS), Interior and State. At the same time, the Education Department will continue to oversee federal student loans and college accreditation.
The arrangement highlights the limits of President Donald Trump’s effort to abolish the department, a goal he first outlined in a March executive action. Even as much of its work is redistributed, millions of borrowers will still rely on the department for repayment options, loan forgiveness programs and aid eligibility.
Major Federal Education Grants Shift to Other Agencies
The six new agreements represent the most significant reorganization of the department’s responsibilities in its 45-year history. The Department of Labor will assume control of some of the largest federal education funding streams, including the $18 billion Title I program for low-income communities, as well as grants for teacher training, English language instruction and the TRIO college-access program.
HHS will take over a grant program that supports student parents and will assume responsibility for foreign medical school accreditation. The State Department will manage foreign language initiatives, while the Interior Department will oversee Native American education programs. Officials say these programs will continue to be funded at levels set by Congress.
Education Secretary Linda McMahon has framed the shift as a “bold action to break up the federal education bureaucracy and return education to the states.” Since the spring, the department has reduced its workforce by hundreds of employees through layoffs and early retirements. Officials say the transfers are meant to show that federal education programs can function without a standalone department.
The Education Department tested this approach in June when adult education programs were moved to the Labor Department. The new agreements go much further, effectively transferring the work of the Office of Elementary and Secondary Education and most of the Office of Postsecondary Education to other agencies.
Critics Warn of Risks to Students and Legal Challenges
Opponents argue that carving up the department could disrupt services for vulnerable students and place complex responsibilities in agencies that lack deep education expertise. Some legal experts also question whether the administration has the authority to move programs that federal law specifically assigns to the Department of Education.
McMahon has dismissed those concerns, saying the department has become a “bloated bureaucracy” while student performance has stagnated.
American Federation of Teachers President Randi Weingarten pushed back in a statement shared with Newsweek via email, saying, “This move is neither streamlining nor reform–it’s an abdication and abandonment of America’s future. Rather than show leadership in helping all students seize their potential, it walks away from that responsibility.
“What’s happening now isn’t about slashing red tape. If that were the goal, teachers could help them do it: and we invite Donald Trump and Linda McMahon to sit down with educators and hear from the people who actually do this work every day. Teachers know how to make the federal role more effective, efficient, and supportive of real learning–if only the administration would listen.”
In the long term, the administration wants Congress to write the program transfers into law — a necessary step if the department is to be fully dismantled. Until that happens, the core federal student loan system will remain with the Department of Education, meaning borrowers will continue to depend on it even as the agency’s broader role is scaled back.
Will Student Loans Be Forgiven?
Last month, the Trump administration confirmed an agreement to cancel student loan debt for eligible borrowers under certain income-driven repayment plans, following a legal settlement between the American Federation of Teachers (AFT) and the Department of Education.
To qualify, borrowers typically must have made 20 to 25 years of consecutive qualifying payments, depending on when their loans were issued and which repayment plan they enrolled in. As of October 2025, more than 2 million borrowers are enrolled in these plans.
Overall, more than 42 million Americans owe a collective $1.7 trillion in student loan debt.
As of September, many borrowers were still awaiting decisions on applications for federal student loan forgiveness and income-driven repayment programs, with more than a million applications for such plans yet to be processed.
What Does the Department of Education Do?
The U.S. Department of Education sets and implements federal policy on K-12 and higher education, distributes billions of dollars in funding to states and school districts and enforces civil rights laws that protect students. It administers key programs for low-income students, English learners and students with disabilities, and sets rules for colleges that participate in federal financial aid.
The department also manages the nation’s $1.6 trillion federal student loan portfolio, oversees systems for accrediting colleges and universities, and collects nationwide data on school performance. While states and local districts run public schools on a day-to-day basis, the department plays a central role in ensuring that federal funds are used appropriately and that students have equal access to educational opportunities.
When Was the Department of Education Created?
The Department of Education was created in 1979, when President Jimmy Carter signed legislation establishing a Cabinet-level agency focused exclusively on education. Before that, federal education programs were scattered across several departments, including the former Department of Health, Education and Welfare.
Supporters of the new agency argued that a dedicated department would bring stronger attention, coordination and oversight to national education issues. The department officially began operations in May 1980.
Since its creation, the agency has often been at the center of political debates about the federal government’s role in schools, with critics — including, most recently, President Donald Trump — calling for its powers to be scaled back or the department to be eliminated altogether.
