The Department of Education and Federal Student Aid: What Changes Mean

The United States Department of Education is the federal agency responsible for overseeing federal education policy, administering federal education funding programs, and managing the federal student loan system. Proposals to restructure, reduce, or eliminate the department have been advanced by various political actors, and understanding what the department actually does is essential for evaluating what such changes would mean in practice. The Department of Education was established in 1979 as a cabinet-level agency, separating education from the former Department of Health, Education, and Welfare. Its creation was controversial at the time and remains so, with some political actors arguing that education is properly a state and local function that should not have a federal bureaucratic home. The department's current annual budget is approximately 238 billion dollars, the vast majority of which consists of financial aid, grants, and loan programs rather than departmental operations. Federal student aid, administered through the department's Office of Federal Student Aid, is the department's largest programmatic function. The Free Application for Federal Student Aid process, Pell Grants, federal student loans, and programs for students with disabilities are all managed through this office. The federal student aid system provides approximately 120 billion dollars annually in grants, loans, and work-study to support postsecondary students. Proposals to move student aid to the Treasury Department, to privatize loan servicing, or to eliminate certain aid programs would require significant legislative and administrative action. Federal education funding to elementary and secondary schools flows primarily through the Elementary and Secondary Education Act, most recently reauthorized as the Every Student Succeeds Act. Title I of ESEA provides funding targeted at schools serving high concentrations of low-income students, totaling approximately 18 billion dollars annually. The Individuals with Disabilities Education Act provides funding for special education programs. These programs are distributed through formula grants to states, which distribute them to districts according to state formulas. Civil rights enforcement in education is a significant departmental function. The Office for Civil Rights investigates complaints of discrimination based on race, sex, disability, age, national origin, and other protected characteristics in educational programs receiving federal funding. OCR's caseload, policies, and guidance significantly affect how institutions respond to discrimination and harassment complaints, as discussed in the context of Title IX. Research and data collection functions of the department include the Institute of Education Sciences, which funds education research, and the National Center for Education Statistics, which collects and publishes data on educational attainment, school characteristics, teacher workforce, and many other dimensions of the education landscape. These data are foundational for education research and policy analysis. Proposals to transfer the Department of Education's functions to other agencies or to eliminate it would require congressional action, since the department was created by statute and can only be abolished by statute. Individual programs would need to be either eliminated or transferred to other agencies. The practical complexity of such a reorganization, particularly for the student aid system, which involves contracts with loan servicers, data systems, and millions of active accounts, is very significant. State and local governments bear primary responsibility for K-12 education funding and operations, with federal funding representing approximately 8 to 10 percent of K-12 expenditures nationally. Changes to federal education policy affect this relatively small but symbolically and practically important share of education funding, as well as the regulatory conditions attached to that funding and the civil rights framework that applies to all schools receiving federal dollars. The education policy landscape is monitored by a range of organizations including the Education Trust, National School Boards Association, American Federation of Teachers, National Education Association, Council of Chief State School Officers, and many research institutions that provide analysis of proposed policy changes and their likely effects on students and institutions.