Staff reductions at the U.S. Department of Education’s Office of Federal Student Aid (FSA) have raised significant concerns among colleges and students regarding the future of federal student aid programs. The FSA plays a critical role in administering and processing the Free Application for Federal Student Aid (FAFSA) and assisting colleges in distributing federal aid to students, among several other responsibilities about the federal student aid programs.
Although Secretary of Education Linda McMahon has assured the public of her commitment to maintaining support for programs outlined in the Higher Education Act of 1965, many institutions report a different reality according to a recent survey conducted by the National Association of Student Financial Aid Administrators, NASFAA. Colleges responded with reports of delays, reduced assistance, and other challenges that could disrupt the federal student aid system, affecting students who rely on these resources.
The Scope of the Problem
NASFAA, a national nonprofit organization dedicated to ensuring all qualified students have access to postsecondary education regardless of their socioeconomic background, represents thousands of colleges across the country. In May 2025, NASFAA conducted a survey among its member institutions to assess the impact of workforce reductions at the U.S. Department of Education.
Approximately 900 colleges representing all sectors of higher education responded and reported impacts and concerns regarding the administration of the federal student aid programs. Nearly 50% of institutions indicated that their biggest concern has been impacts to student access to federal student aid.
Schools are feeling the strain from support gaps from FSA. Thirty-three percent of colleges reported fewer resources and declining support from regional FSA offices, many of which seem to have closed. Over 30% of schools are also experiencing major delays in getting answers or troubleshooting help from Department of Education contacts.
The operational issues are hitting critical processes like FAFSA/ISIR processing, loan disbursement through the COD system, and even new program applications via the e-App platform. Since April 28, 2025, 50% of the respondents said processing times for e-App changes have been longer than usual. Even worse, 25% of schools haven’t received any response at all on their applications. The e-App system is where schools apply to participate in federal student loans, add or delete programs and locations, recertify their participation agreements, and update contact information for their school.
These delays are forcing schools to stretch their already limited resources, reassigning staff, and tasks to cover inefficiencies caused by federal support gaps.
Federal Student Aid Programs Facing Changes Next Year
Staffing reductions at FSA haven't been the only concern in 2025. The fiscal year 2026 budget summary released by Congress included a proposed 15% cut to Department of Education funding.
Here’s how the proposed budget changes would affect key aid programs used by millions of students annually:
- Lowering the Maximum Pell Grant: The maximum Pell Grant award would decrease to $5,710 for the 2026-2027 school year, down from $7,395 in 2025-2026.
- Eliminating FSEOG Grants: The Federal Supplemental Educational Opportunity Grant (FSEOG), which supplements financial aid awards for neediest students, would be eliminated.
- Reducing Federal Work-Study Program Funding: Resources for Federal Work-Study, a crucial source of financial aid through part-time jobs on campus, would face
- Cuts to TRIO and GEAR-UP Programs: Both programs that help disadvantaged students prepare for and succeed in college would be significantly reduced.
These changes are in addition to changes being presented in the "Big Beautiful Bill Act" that is currently being discussed in Congress.
What This Means for Students and Parents
If you’re a student or parent navigating these changes, it’s easy to feel overwhelmed. But there are actionable steps you can take to stay on top of your financial aid options and minimize potential disruptions.
- Stay Educated: Understanding how shifts within the FSA and budget proposals may impact your aid package can help you plan.
- Apply for Wide-Ranging Scholarships: Even if changes to federal programs occur, scholarships can help fill the gap. Search for awards that fit your interests, academic achievements, and financial need. Websites such as Edvisors are great places to begin.
- Consider Financial Fit: When researching colleges, aim for schools that fit different price ranges. Financially safer choices can provide flexibility if federal assistance becomes less predictable.
While staff cuts and potential budget reductions pose challenges, being proactive can help you minimize their impact on your financial aid. Staying informed about changes, exploring all funding options, and working closely with your school’s financial aid office will empower you to move forward confidently.
Remember, obstacles shouldn’t deter you from your path to higher education. With awareness and strategic planning, you can continue to make progress toward your dreams.