Last week, President Donald Trump signed an executive order calling for the closure of the U.S. Department of Education—a move that cannot take effect without congressional approval. This order marks the latest blow after a series of layoffs and reductions in force that have already undercut the Department’s operations.
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The Department of Education recently made an unprecedented decision to lay off nearly half its staff, cutting 1,315 positions in a move that has sparked widespread concern. U.S. Secretary of Education Linda McMahon defended the drastic measure, claiming the reduction in force was necessary to promote efficiency, accountability, and to ensure resources are focused on students, parents, and teachers. However, these major workforce cuts are likely to have the opposite effect, jeopardizing the Department’s ability to function effectively and fulfill its legal obligations. These layoffs are poised to create longer delays and may result in unnecessary harm for borrowers and their families.
The staff reductions will largely impact the Office of Federal Student Aid (FSA). FSA manages and reviews student aid complaints. Serving 43 million borrowers, the FSA’s primary purpose is to safeguard students, borrowers, and taxpayers and to enforce compliance with the laws and regulations related to student financial aid. However, its ability to effectively carry out these critical functions is directly tied to its staff capacity, which must scale to meet the needs of the borrower population.
FSA’s role in federal financial aid and its impacts on borrowers
FSA is responsible for managing all Title IV federal funds, which includes distributing financial aid to colleges and universities as well as overseeing the proper use of those funds. FSA’s role is to safeguard taxpayer dollars and ensure schools are adhering to the rules meant to protect students. A significant reduction in staff means fewer people available to monitor compliance and carry out these vital tasks.
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Within the FSA, the Ombudsman Office is charged with reviewing and answering consumer complaints and plays a critical role in ensuring that borrowers have an accessible and reliable channel for resolving student loan disputes. There are alarming reports that the department is moving to reduce the visibility of the “submit a complaint” button and refer to it as merely a way to “submit feedback.” In years past, the office actually worked to make the online complaint tool more visible and accessible in order to address issues with borrowers getting their student loan issues resolved. For example, prior to the Biden-Harris administration, 99 percent of people who applied for cancellation under the Public Service Loan Forgiveness Program (PSLF) were denied. In fact, only a total of 7,000 public servants had received debt relief through PSLF. However, due to the fixes made by the Biden-Harris administration, 1,069,000 borrowers received their earned cancellation under PSLF by January 2025. Burying borrowers’ easiest and most visible way to submit a complaint on the FSA’s website would directly hamper this progress.
Stakeholders have long observed that insufficient resources in FSA have led to chronic backlogs and delays. The overwhelming volume of complaints—which soared to over 289,000 in fiscal year 2024—demonstrates the scale of the issue. Each year, the Consumer Financial Protection Bureau (CFPB) publishes an annual report highlighting the challenges facing borrowers due to loan servicing failures and program disruptions. Between July 1, 2023, and June 30, 2024, the CFPB reportedly received 13,524 complaints related to federal student loans; 3,399 related to private student loans; and 1,354 complaints related to the student loan debt collection system. For example, one borrower told the CFPB that “despite paying before their due date, their payment was marked as past due.” Another borrower experiencing an eight-year borrower defense discharge delay told the CFPB that after “paying at least $46,125 on the principal of their loans and an additional $35,682 in interest, they received a refund of $689.30. The borrower said they ‘highly doubt the [refund amount] is even remotely correct.’”
Common complaints like these reveal the student loan system’s failures, and in response, department staff are charged with identifying and developing solutions to improve servicing errors or correct misleading information. As of March 2025, more than 6,500 complaints remain unresolved, and the department has not made any meaningful progress on these cases. It’s likely that the recent staff cuts will only further delay resolution of these cases.
Issues at FSA during Trump’s first administration
FSA has long struggled with limited resources, making it difficult to effectively enforce the laws and regulations governing higher education programs. During the first Trump administration, the department reduced its staff by more than 500 employees—cutting its overall size by 13 percent—and staff within FSA were largely affected. The department made a troubling decision to fire eight out of 21 staff members who handle student loan complaints, including complaints directly related to PSLF and allegations of institutional fraud.
During Trump’s first administration, borrowers were often left in limbo when seeking student debt relief options, typically facing multiple hurdles and other types of administrative and loan servicer errors. For example, more than 130,000 borrowers defrauded by their institution were denied relief under the borrower defense to repayment program, and some of these claims sat for as long as six years. As a result, borrowers saw their balances grow and took hits to their credit scores.
Conclusion
The combination of decreasing the department’s staff and calling for the closure of the department itself will likely hinder the agency’s ability to meet its legal obligations—and we anticipate an increase in challenges for borrowers and their families. Between ongoing servicer issues; the uncertainty around the department implementing portions of the SAVE plan and other income-driven repayment plans; and the associated confusion around administrative forbearance, borrowers need a clear, efficient, and accessible process for contacting the department when other attempts to resolve their student loan issues fall short. We urge the Department to reconsider any further actions that might reduce its capacity to handle student loan complaints. The Department of Education must continue to push for investment in adequate staffing to meet the needs of today’s borrowers.