How FAFSA Functions Under the Department of Education as Trump to Cut Agency

The future of the U.S. Department of Education (DoE) remains uncertain as former President Donald Trump moves forward with plans to dismantle the agency. The move raises questions about the fate of essential education programs, including Free Application for Federal Student Aid (FAFSA).

With Trump prepped to take steps to eliminate the DoE on March 20, concerns arise about how these functions, including FAFSA, will be maintained.

Newsweek previously reported that federal student loan payments, federal funding for students with disabilities under the Individuals with Disabilities Education Act (IDEA) and Title I funding will remain unchanged under the order, according to reports.

Why It Matters

FAFSA is a critical tool for millions of students seeking financial assistance for higher education. It is administered by the Department of Education, which oversees federal grants, loans, and work-study programs. For the 2025 fiscal year, the Department has a budget of approximately $103 billion.

If the DoE is eliminated, students, parents, and educators may face disruptions in financial aid processing and loan management.

Why Is Trump Dismantling the Department of Education?

Trump has advocated for reducing the federal government’s role in education, arguing that education policy and responsibilities should be controlled at the state and local levels.

Trump has also condemned schools for teaching “critical race theory, gender ideology or other inappropriate racial, sexual or political content onto our children.”

The president’s order, slated to be signed on Thursday, is expected to direct Education Secretary Linda McMahon to take steps to dissolve the Department of Education, according to ABC News. However, Congressional approval is required to abolish any federal agency.

It comes after Trump has already made cuts to the DoE. Earlier this month, the department’s staff were cut, either through buyout offers or the termination of probationary employees.

What Does the Department of Education Do?

The DoE plays a central role in funding and regulating education in the U.S. It administers federal student loans and grants, including Pell Grants and Direct Loans, ensuring that higher education remains accessible to low- and middle-income students.

Additionally, the DoE enforces educational policies, monitors compliance with civil rights laws, and provides support for disadvantaged students through programs such as Title I funding for low-income schools.

Title I and other federal funding for individuals with disabilities is not expected to be impacted by the department cut, according to reports.

What Is FAFSA?

FAFSA is a form that students must complete to determine their eligibility for federal financial aid, including grants, loans, and work-study programs.

The FAFSA application collects information about a student’s family income, assets, and dependency status to calculate the Expected Family Contribution (EFC) and determine financial aid eligibility.

According to Federal Student Aid, FAFSA is required for students to access aid such as Pell Grants, federal loans, and many state and institutional scholarships.

How Student Loans, Loan Forgiveness and Repayment Plans Could Be Impacted

According to Federal Student Aid, federal student loans, including Direct Subsidized and Unsubsidized Loans, are issued by the government and serviced by loan servicers under contract with the DoE.

If the DoE is eliminated, student loan programs may need to be reassigned to another federal agency. Experts previously told Newsweek that cutting the department could increase disruptions if the handling of federal student loans is reassigned elsewhere, like to the Treasury Department.

The DoE currently administers programs like Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans, which allow borrowers to reduce their monthly payments based on income levels.

BigFuture by College Board notes that income-driven repayment plans help millions of borrowers manage their student debt. If restructuring efforts disrupt these programs, borrowers may face increased repayment difficulties.

Some student loan borrowers have already faced hardship in rising monthly payments under certain IDR plans.