Sorry for the long absence! I was out visiting family in the Philippines (RIP jet lag). But we’re back! This week we’ll be evaluating who’s set to win–and who’s set to lose– from the reduction / destruction of the Department of Education.
End of an Era
Donald Trump is reshaping the federal government in ways that will reverberate for decades. The gutting of the Consumer Financial Protection Bureau, the dismantling of USAID. The US’s role as a reliable trade partner are also in doubts, and more deals are being inked between our allies sans America, to account for trade disruption and tarrifs: The EU and Mercosur inked a deal in December, the induction of Indonesia into the BRICS. The ASEAN countries plan on meeting with the Gulf Cooperation Council in May, and have extended an invitation to China, but not the US.
Perhaps the least and most surprising is the dismantling of the Department of Education, which was first formed in 1979 and whose abolishment has been a Republican policy want since Reagan.
Substituting for the DOE
The DOE accounts for about 4% of total federal funding. It disburses everything from Title I funds that serve districts with low-income families, to Pell Grants for millions of undergraduates, to work-study for students working on campus.
The Education Department administers $119B in funding that has been approved by Congress, or roughly 4% of total federal expenses. On average, about 10% of per student spending at the local level comes from federal disbursements. While this may seem small, public schools are already facing budget shortfalls.
The Winners
Private Student Loan Lenders and Servicers
The end of the Department of Education would likely mean the end of a multitude of grant programs, although the fate of Pell Grants is less clear. No matter what, it’s clear that disbursements would end: Either momentarily (as the government errs on the side of caution to comply), or permanently. 7 million students (one-third of all undergraduates) are awarded Pell Grants. 13 million students receive low interest loans, grants, and work-study funds from the Department of Education. They would be forced to turn to private lenders for more money, or forego college altogether.
Servicing of federal loans, meanwhile, would likely exceed any states’ abilities, and be outsourced to large loan service providers.
Charter School Networks & Private Schools
While charter schools can receive funding from the DOE via the Charter Schools Program, it’s unlikely that this would get cut, given how pro-school choice this administration is. Instead, large charter networks (like the one I used to teach at) would continue benefitting from some funding, will continue to fundraise via their boards, and will watch as the public school enrollment death and quality spiral continues. Charter schools will pick up more and more students leaving doom-looped public educational systems.
The Losers
Public Schools & Public School Students
There’s no catching a break for public schools, especially in large urban areas. They’ve had to content with climate-related disruptions, COVID learning loss, the teacher shortage, and the student enrollment cliff. School districts will now watch as a their budgets take a haircut, especially poorer districts who benefit from Title I funding.

Interestingly enough, many states that receive the most Title I funding are Republican: Alaska ($4,370 per student), North Dakota ($3,390), Montana ($3,270), Kentucky ($3,200), Mississippi ($3,030), etc. New York and California receive $2,440 and $2,750 per student respectively. This could pump the brakes on a full dismantling of the Department of Education.
Undergraduate Students
Especially students from socio-economically disadvantaged backgrounds attending for-profits.
When asked about their ability to come up with $2,000 within a month in an emergency, 44 percent of Pell students at for-profits stated they certainly could not, compared with 37 percent of Pell students at community colleges.
- Higher Education
If loan service providers take over the servicing of federal student loans, it’ll be horrible for borrowers. Especially with the CFPB monitoring gone. Remember Naveant?
Higher Education
Bad time to be a university. Domestic undergraduate student numbers dropped 1%, or 224,000 students. But foreign student enrollment declined by 7%, and will only decline further as a result of immigration policies and public perception of the US (source: Foster Global).
Add in the disruption under the Biden-era FAFSA updates, and Trump’s crippling (or demolition of) the Department of Education will be a one-two-punch for many colleges across the country.
Winner and Loser
For Profit Universities
It’s hard to tell how much of a sting for-profits will feel. The Trump Administration has effectively ended all monitoring by the Consumer Finance Protection Bureau, so shady practices are going to abound. Companies like Adtalem might be able to absorb the loss of Pell Grant and grant funding.
The stock’s bull run shows that Fahmi Quadir’s short position might be in jeopardy.