Education Department staffing cuts deepen student-loan repayment risks

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Education Dept. staffing cuts and risks

Highlights

The Department of Education's inspector general reported a 40% reduction in Federal Student Aid staff, eliminating nearly 1,600 jobs and disrupting servicer oversight and technology support.
The Government Accountability Office found that FSA halted call quality and billing accuracy assessments amid staff cuts, increasing risk of borrowers receiving incorrect student-loan information.
Trump's student-loan overhaul, launching July 1 with new repayment plans and caps, increases borrower pressure amid already-reported administrative errors and weakened support infrastructure.

Inspector general details operational strain

As reported by the Department of Education’s inspector general, the office of Federal Student Aid lost 40% of its staff during the DOGE era in early 2025, offering the clearest picture yet of how nearly 1,600 department job cuts are affecting loan servicing and oversight functions.

Among the hardest-hit units are offices responsible for overseeing servicers and lenders, as well as teams that collect eligibility and financial analysis data for schools participating in Federal Student Aid programs. The report also says offices with half or fewer of their staff remaining include those managing FSA’s customer website, the mobile aid application, IT services for all FSA systems, and risk assessment for FSA programs.

The Government Accountability Office said in a March report that FSA stopped assessing servicers’ call quality and billing accuracy because of staffing reductions, leaving borrowers at risk of receiving incorrect payment information. Borrowers rely on the student aid website to enroll in repayment plans and track account changes, so technical problems can disrupt contact with servicers or delay payments.

Repayment overhaul adds pressure for borrowers

The report arrives just over a week before President Donald Trump’s broad student-loan overhaul takes effect on July 1, including new repayment plans and borrowing caps. Borrowers have already reported administrative errors as they prepare for payments, including incorrect payment projections that they say make it harder to budget for potentially higher monthly bills.

The data follows a March 2025 request from Senator Elizabeth Warren, who said on Tuesday that Americans deserve to know how the administration is cutting education capacity. In a letter included in the report, Deputy General Counsel Philip Rosenfelt said litigation related to the staffing reductions limited the information the department could provide.

The workforce cuts were part of a DOGE-led effort to reduce the federal workforce and improve efficiency, and they coincided with the Trump administration’s goal of dismantling the Education Department. The administration has already announced partnerships with other agencies, including a plan to transfer management of federal student loans to the Treasury.

Our earlier coverage of U.S. supply-chain resilience efforts explained how the administration has been trying to rebuild capacity in critical industries while navigating shortages, compliance burdens, and workforce gaps. We noted that policymakers were aiming to reduce dependence on risky chokepoints by diversifying sourcing and selectively expanding domestic production, rather than attempting to make every component fully at home.

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