What Closing the Department of Education Could Mean for the FAFSA
Republicans could abolish the Education Department. What would that mean for your finances?
BigThink
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Throughout his campaign, Trump and his allies promised to dismantle the Department of Education—an attack Republicans have been campaigning on for years. A candidate for United States Senate suggested throwing the agency “in the trash can.” Another called it “one of the worst monstrosities that’s ever been created.”
Dismantling the Department of Education could leave billions of funds, scholarships, grants, and more hanging in the balance for the millions of K-12 and college students attending schools in the U.S. Here's what you need to know about Trump's attacks on the Department of Education (DoE), and what that means for you.
What does this mean for FAFSA?
Currently, the Education Department manages a staggering $1.5 trillion in student loan debt for over 40 million borrowers. Without the department, the Free Application for Federal Student Aid (FAFSA)—a critical pathway for millions of students seeking financial assistance—would need to be reassigned to another federal agency.
This would mean disruption in the standardized financial aid application process, uncertainty about which agency would manage student loan portfolios, and general bureaucratic chaos in redistributing loan management responsibilities.
Similarly, this would hurt all sorts of other financial aid. For instance, Pell Grants, which provide need-based grants to low-income students, could face significant restructuring. Transferring administration to another agency might introduce delays in grant disbursement, changes in eligibility criteria, and increased administrative overhead.
So, what do Republicans propose instead? The Heritage Foundation's Project 2025 suggests potentially shifting disability and low-income student program oversight to the Department of Health and Human Services. They plan to eventually phase out that funding and convert it to no-strings-attached grants to states. In other words, the proposed plan is to broadly reduce federal involvement in educational financial assistance.
The bottom line
Naturally, closing the Department of Education would represent a fundamental shift in how the U.S. manages educational funding and student financial support. And the FAFSA, a cornerstone of federal student aid, would be particularly vulnerable to such institutional changes, potentially creating significant uncertainty for millions of students seeking higher education financing.
For now, we can take a deep breath. Closing the department would require complex legislative action, with Congress needing to redistribute billions in annual educational funding and actually establish new mechanisms for managing federal educational financial aid. The path ahead remains uncertain, but none of this will happen overnight.
Meredith Dietz
Senior Finance Writer
Meredith Dietz is Lifehacker’s Senior Finance Writer. She earned her bachelor’s degree in English and Communications from Northeastern University, where she graduated as valedictorian of her college. She grew up waitressing in her family restaurant in Wilmington, DE and worked at Hasbro Games, where she wrote rules for new games. Previously, she worked in the non-profit space as a Leadership Resident with the Harpswell Foundation in Phnom Penh, Cambodia; later, she was a travel coordinator for a study abroad program that traced the rise of fascist propaganda across Western Europe.
Since then, Meredith has been driven to make personal finance accessible and address taboos of talking openly about money, including debt, investing, and saving for retirement. Outside of finance writing, Meredith is a marathon runner and stand-up comedian who has been a regular contributor to The Onion and Reductress. Meredith lives in Brooklyn, NY.
