Trump speeds up plans to dismantle education dept, but retains $1.3 tn student loan system for now

President Donald Trump is accelerating his plan to dismantle the US Department of Education, but for now, he is leaving its massive student loan system—roughly $1.3 trillion in size—untouched, according to Newsweek.

Under an executive order signed earlier this year, Trump instructed Education Secretary Linda McMahon to scale back the department drastically, in line with his long-standing goal of returning education control to states. Downsizing has already begun: the department announced layoffs impacting about 1,300 staff—nearly half of its workforce.

Still, some core programmes run by the Education Department are being preserved.

According to the agency, functions such as managing federal student loans, distributing Pell Grants, and other student-aid and grant programmes will continue even as the department shrinks. McMahon has defended the cuts, saying the move is part of a broader effort to eliminate “bureaucratic bloat” while keeping funding flowing to students, educators, and states.

Critics, however, are raising alarms. Sameer Gadkaree, president of the Institute for College Access & Success, told Newsweek that the downsizing could cause “outages or breakages” in essential support systems. He warned that borrowers may find it harder to access accurate advice on repayment, while colleges could face confusion in student aid processes. National Education Association chief Becky Pringle echoed those concerns, saying that the dismantling could make higher education “more expensive and out of reach” for many families.

There’s also a political dimension.

Experts note that Trump’s restructuring aligns with goals laid out in Project 2025, a conservative policy blueprint calling for a minimal federal role in education. But observers warn that a full shutdown of the Education Department would likely disrupt services for millions, especially vulnerable students.

Leaving the student loan system intact for now may reflect the administration’s cautious approach. While Trump seeks to reduce the department’s size, abandoning or destabilising the loan programme could spark serious backlash, given how many Americans rely on it. As of now, sources say he plans to keep loan management under government control, even if other department duties are redistributed.