Student loans, Pell grants will continue despite Education Department downsizing, expert says

As President Donald Trump moves to downsize and eventually dismantle the Department of Education, an expert in contact with White House stakeholders assured that the department’s programs, including funding, student loans and civil rights protections, will continue.

“They want to make sure, especially with things like Title I schools for disadvantaged students, and high poverty areas to civil rights protections for girls in sports, to race equality in education through Title Six will continue to be enforced through the federal Department of Education until and unless those burdens, those responsibilities, can be shifted to other departments, and that would take place by congressional action,” Sarah Parshall Perry, top legal expert at Heritage Foundation, told Fox News Digital in an interview.

Trump signed a long-anticipated executive order Thursday to do away with the Education Department and directed Education Secretary Linda McMahon to initiate the shutdown process and transfer key functions, such as Pell Grants and Title I funding, to other federal agencies.

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Perry said Thursday’s order “is going to be the first step in a very long, consistent, labor-intensive process to be able to continue the work of downsizing.”

“Which is exactly what we’ve seen the Department of Education already do, but also specifically continue enforcing civil rights and financial aid responsibility through the federal government until those particular duties are passed to other agencies,” she said.

For instance, Perry said, civil rights enforcement would shift to the Department of Justice, while student loan processes would be handled by the Department of the Treasury.

“They fully understand, and this is gratifying to hear that the White House has to work with Congress to offload the full responsibilities to other agencies and to ultimately unwind the Department of Education,” she added.

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Perry said the initial cuts so far within the agency have been narrowly focused on slashing critical race theory and diversity, equity and inclusion initiatives, in line with Trump’s other executive orders.

“But the only two provisions in the executive order are taking legal steps to continue narrowing the agency’s focus and continuing to enforce civil rights and administer ongoing federal financial programs, because those duties cannot be offloaded to other agencies without shifting the burden by congressional action,” she said.

Students attending college or private schools with student loans or Pell grants will continue to receive their federal funding under Trump’s order. Perry said there is “a misconception” that schools would be forced to close or raise taxes due to budget shortfalls caused by downsizing the department, but “federal taxpayer spending actually makes up less than 10% per pupil funding in the state, so the remaining amount is generally split between local and state taxpayers, not federal taxpayers.”

Since its establishment in 1979, the Education Department’s budget has grown from approximately $14 billion to about $268 billion in Fiscal Year 2024, accounting for 4% of total federal spending, according to the Office of Management and Budget.

Prior to the department’s creation, federal student loans were administered through the Guaranteed Student Loan Program, established in 1965 under the Higher Education Act. This program involved the federal government guaranteeing loans provided by banks and non-profit lenders to students attending eligible institutions.

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Perry said the focus should be on strengthening education at the state and local levels, while ensuring continued federal oversight of student loans, civil rights laws, and Title One funding for underprivileged and low-income students.

“So the federal government is always going to have a responsibility to enforce, apply and sort of interpret and send these particular protections and their financial associations,” Perry said.

She suggested that these federal programs could be separated or “divested” from the Department of Education, meaning the department’s role in administering them can be reduced or transferred to other agencies.

Trump’s executive order fulfills a major campaign promise, aiming to restore local control of education and back school choice amid the ongoing culture war.