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Home » Blog » Massive Layoffs May Have Big Impact at the Office of Federal Student Aid
  • Contents
  • Major Layoffs Across the Department of Education
  • The Fallout for Federal Student Aid
  • What's Next?

Massive Layoffs May Have Big Impact at the Office of Federal Student Aid

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By Elaine Rubin
March 12, 2025
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Yesterday, the U.S. Department of Education (ED) announced sweeping layoffs, cutting 50 percent of its workforce. These reductions have affected several critical areas of the department, including the Office of Federal Student Aid (FSA). Although Secretary of Education Linda McMahon has stated that federal student aid programs will continue to operate, the scale of the layoffs and their impacts raise significant concerns about how these programs will sustain operations.

Let's break down the affected areas and the possible long-term fallout for education professionals, parents, and students. Here's what we know so far.

Major Layoffs Across the Department of Education

The Department of Education plays a crucial role in ensuring access to quality education and managing federal student aid programs. Yesterday’s layoffs affected thousands across key offices and teams that provide essential services.

Here’s an overview of the some of the areas impacted.

The Office of Federal Student Aid (FSA)

The FSA oversees billions of dollars in federal student loans and grants each year, and manages a student loan portfolio of over $1.6 trillion. It manages everything from FAFSA applications to loan repayment plans. However, FSA suffered significant cuts:

  • 90 employees of the School Participation Division, specifically the regional staff. This team manages school participation, oversight, and technical assistance for institutions that participate in federal student aid programs.
  • 40 team members responsible for federal student loan servicer oversight, ensuring federal loan servicers comply with contractual requirements.
  • Ombudsman Group: This team, which helps resolve student and borrower complaints, appears to have been reduced further following earlier rounds of layoffs. We are hearing that some additional staff was eliminated as part of the layoffs yesterday.

Institute of Education Sciences (IES)

The IES gathers critical data to support oversight and research-based decision-making in education. Over 100 members of this group were laid off, potentially stalling transparency efforts and limiting access to vital educational data for families and educators.

Office of Civil Rights (OCR)

The Office of Civil Rights lost approximately 240 employees. These individuals helped enforce education protections for students with disabilities and addressed legal issues surrounding civil rights violations in schools.

Office of General Counsel

Around 40 attorneys from the Office of General Counsel were also dismissed. These attorneys manage the issues across the U.S. Department of Education. Regarding the Office of Federal Aid specifically, these lawyers litigated cases related to fraud or illegal practices conducted by higher education institutions. Losing these resources could reduce the federal government’s ability to hold colleges or individuals accountable for fraud, waste, and abuse.

Office of Finance and Operations

Cut 40 staff members who manage federal grant programs.

Office of Elementary and Secondary Education

Lost 50 employees responsible for supporting K-12 programs.

The Fallout for Federal Student Aid

Altogether, approximately 325 employees were cut from the Office of Federal Student Aid alone, raising concerns about the future of federal financial aid programs and their management. The lack of a clear plan on how remaining employees will absorb these responsibilities further complicates the situation.

Layoffs in critical teams within FSA directly affect the administration of federal student grant and loan programs. Roles and functions that provided compliance, oversight, and technical assistance to schools and servicers, and overall transparency have been heavily impacted.

The long-term effects could mean decreased efficiency for processing FAFSAs, handling complaints, and supporting students struggling with loan repayment. Without a clear strategy to reorganize responsibilities, these layoffs could disrupt the federal student aid programs and systems.

What's Next?

Although the Secretary of Education assured the public that federal student aid programs would continue to operate, the lack of a robust transition plan raises concerns about their actual ability to sustain operations. With so many vital roles vacated, parents, students, and educators are left wondering how the Department of Education plans to address potential gaps in service and oversight.

Additionally, the speed and scale of these layoffs hint at a lack of strategic preparation, making it difficult to gauge how remaining employees will be equipped to take over critical responsibilities. These gaps in continuity could have far-reaching consequences for educational institutions and students relying on federal student aid.

Students and parents should continue to monitor the situation. And be ready for the rollercoaster that’s coming in the next months. As these impacts were sudden, we are not sure of the impacts yet.

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Elaine Rubin

Elaine Rubin is the Director of Corporate Communications at Edvisors. She has worked in higher education finance for more than 10 years, and provides information and advice from both personal and professional experiences. Elaine holds a degree in Political Science with a concentration in Public Policy and Administration from Northeastern University.

Find Elaine Rubin on LinkedIn.

If you would like to schedule an interview with Elaine, please reach out to us at [email protected]

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