For the past two or so months now, DOGE (or the department of government efficiency) has been trimming some fat from the federal government. It’s been Elon Musk’s goal to reduce waste by as much as $1 trillion. Now, while some DOGE cuts are probably warranted, others may not be. Time will tell.
But regardless of the effectiveness/necessity of widespread DOGE cuts, the U.S. Department of Education, headed by new secretary, Linda McMahon is doing something far more radical. She has already announced the department will cut its workforce by half, reducing it from 4,133 employees to 2,183…
With longer term plans to completely shut it down – moving decision making in education from the feds to the states.
According to USA Facts, the department spent $268 billion last year, the sixth highest spending of any federal government agency – behind only Health and Human Services, Social Security, the Treasury Department, the Defense Department and the Dept. of Veterans Affairs.[1]
So, what does all this mean for higher education? Will a total shutdown of the Department of Education cripple an already wounded higher education system?
Or will things go on, relatively normal?
Well, today, Conversion Media Group, a national leader in higher education enrollment initiatives, will discuss just this – specifically federal student loans.
As noted in Newsweek, “The agency’s role is mainly financial: it distributes billions in federal money to schools and colleges and manages the federal student loan portfolio. As of January 2024, the department held $1.5 trillion in federal loans for nearly 43 million borrowers, according to the Government Accountability Office.”[2]
And it’s in federal student loans where we may see the biggest effect of the cuts (and potential total shutdown).
Now, while it is not yet clear if the Office of Federal Student Aid will be affected (the division which handles loan disbursement), the department did say that ALL divisions were affected by the cuts. So, it’s safe to assume the student aid office was, or will be.
As quoted in Newsweek, National Education Association (NEA) President, Becky Pringle believes that big cuts in the department will likely “make higher education more expensive and out of reach for middle-class families…
“Gutting the Department of Education will send class sizes soaring, cut job training programs, make higher education more expensive and out of reach for middle-class families, take away special education services for students with disabilities, and gut student civil rights protections,” she said.
However, it must be noted that the NEA advocates federal control over education. And, according to the Cato Institute, “A 2017 study from the Federal Reserve Bank of New York found that the average tuition increase associated with expansion of student loans is as much as 60 cents per dollar. That is, more federal aid to students enables colleges to raise tuition more.”[3]
So, should federal student aid be transferred (with current loans sold off) to the private sector, it is likely the loans may “cost” more… but the incredible rise in tuition rates may slow – which could potentially attract more students.
Unfortunately, we won’t know the real outcomes until (and if) this actually happens.
But regardless of whether student loans go fully private or not, and regardless of what happens to the Department of Education, your school should be aggressively marketing its programs to new prospective students.
And you should be partnering with Conversion Media Group to help you do it.
[1] What does the Department of Education do? | USAFacts
[2] How Student Loans Will Be Impacted by Department of Education Mass Layoffs – Newsweek
[3] Federal Student Loans and Rising Tuition Costs: An Insider Speaks Up | Cato at Liberty Blog