This article was originally published by The American Prospect
Total student loan debt is approaching $1.8 trillion, preventing borrowers of all ages from buying homes and starting businesses. Yet instead of helping the country’s current and former students, the Trump administration has taken steps to exacerbate this crisis. First, the One Big Beautiful Bill Act significantly raises the cost of student debt repayment and caps lifetime borrowing limits, making enrollment for poorer students extremely challenging. On top of that, staff has been gutted at the Department of Education’s Office of Federal Student Aid (FSA). FSA’s two primary responsibilities of disbursement and oversight are now under attack, and it is our students who will ultimately pay the price.
Each year, FSA disburses billions of dollars in grants, loans, and work-study funds to limit the hardship on students attending college, graduate school, law school, medical school, or trade school. FSA also ensures that private lenders managing day-to-day operations on student loans are not scamming students. This is no small task: A majority of students across the country carry some federal aid, and about 42.7 million people carry student loan debt, translating to 1 in 6 Americans.
But President Trump’s education secretary, Linda McMahon, has cut 1,315 positions from the Department of Education, including 326 from FSA. Following the Supreme Court decision in McMahon v. New York, Trump and McMahon now have free rein to lay off half of the department’s staff.
This has made it far more difficult for FSA to carry out its functions, and students and working families are already feeling the impact. One survey by the National Association of Student Financial Aid Administrators (NASFAA) found that both students and colleges report facing significant delays when seeking information about awards. These delays are affecting the entire higher-education ecosystem. According to the Institute for Higher Education Policy, every year approximately six million students from low-income backgrounds take Pell grants to help pay for college. An understaffed FSA equals fewer people to calculate, process, and deliver awards, and fewer trained oversight workers to prevent private lenders from ripping off students.
Consider the example of the questionably named “Professional Career Training Institute.” In 2019, the Houston-based trade school recruited homeless people with promises of paid rent and degrees, falsifying information to take out federal grants on behalf of the students. According to The Atlantic, FSA investigators visited the school to conduct a routine inspection, during which they encountered students who revealed the school’s fraudulent practices. Joined by a team of lawyers and accountants, FSA inspectors found that the Training Institute had been actively gaming the financial aid system, plunging unknowing students into thousands of dollars of student loan debt. This is the sort of abuse that can flourish under a kneecapped FSA.
Since most students receive federal grants and loans, most of higher education’s cash flow comes directly from the Education Department, and cuts there also have a dramatic impact. USA Today reported that 6 in 10 colleges faced changes or slowdowns due to FSA cuts.
FSA also offers some institutional support to schools, from troubleshooting to handling inquiries from students. Some of this support can include providing information about aid, processing FAFSA applications, and ensuring the accurate disbursements of funds. Absent this support, the NASFAA found that administrators from 909 colleges and universities across the country are feeling slow response times and almost sedate aid processing. The biggest concern, of course, is the fear of students losing access to aid, and thus schools losing access to payments.
One administrator at Northwest Career College in Las Vegas said that it’s becoming more difficult to track down a student’s FSA ID, which is needed to access all online systems at the Department of Education. Without the ability to track their award, students can’t tell how much they are taking in loans, or access grant information that the department is supposed to provide to borrowers. Inside Higher Education goes on to say that colleges have noticed lags in communication about financial aid.
While nonenforcement by FSA has not necessarily been immediately felt, we can look to the first Trump administration to see what the consequences of that are like. Back then, Education Secretary Betsy DeVos shrank FSA’s staff by roughly 13 percent, which included 8 of the 21 employees who oversaw enforcement and the Public Service Loan Forgiveness (PSLF) program. PSLF offers full federal loan forgiveness to people who work for approved nonprofits or in government for ten years.
The costs of nonenforcement aren’t a theoretical issue. Former students of for-profit colleges and universities ended up suing DeVos for failing to enforce a rule allowing them to petition for student loan forgiveness if they were defrauded by their institution. During the Obama administration, the department approved thousands of loan cancellations for for-profit school students, in what is known broadly as “borrower defense to repayment.” DeVos and Trump stalled the program, leaving over 100,000 borrowers in limbo. During the Biden administration, the Education Department settled with plaintiffs a sum total of $6 billion in loan cancellation.
With the curtailed FSA, lawsuits like these are only going to increase. Thousands of borrowers awaiting awards will be left hanging due to lack of agency capacity. This will most likely extend to nonprofit schools. Currently, the American Federation of Teachers is suing the Department of Education for blocking PSLF. More lawsuits will probably be filed.
Institutional support is especially important right now because this is also the first full year of the FAFSA Simplification Act. Signed into law at the tail end of the first Trump administration, the law expanded the Pell grant program and reformed the Free Application for Federal Student Aid (FAFSA). It replaced the department’s own convoluted system for measuring a student’s expected financial contributions to tuition with a streamlined eligibility index, driven by the schools themselves. However, students and parents report difficulties with locating tax documents, changes in income, and even problems in defining citizenship status. This throws the new system into chaos, especially now that it’s cumbersome to even apply for aid. The cuts to FSA will only compound these problems in the coming years.
With a fully staffed FSA under Education Secretary Miguel Cardona and President Joe Biden, there were still breakdowns in communication and technical difficulties that resulted in a total of four million unanswered calls to the department. The Trump administration is not faring much better, with calls and emails left unanswered. The FAFSA Simplification Act, coupled with the student loan changes in the Big Beautiful Bill, will most likely result in even fewer students deciding to enroll.
The Trump administration’s war on FSA will likely result in the wealthiest of Americans being able to enjoy higher education, while everyone else struggles to overcome new barriers. Students at some schools have resorted to posting GoFundMe pages to finance their education because they are in limbo awaiting their awards. I myself share some of these anxieties, asking myself every day how I would reasonably afford my Master of Education program this coming fall.
The Department of Education has not historically focused its efforts on the needs of students. Instead of ensuring that the dreams of higher education are met, students are left to raise money through GoFundMe or other means. That’s not what the promise of this department or this country should be.