What the Closure of the U.S. Department of Education Could Mean for Current & Future Students (By Chad Williamson)
- April 1, 2025
In a bold and controversial proposal, federal lawmakers are considering closing the U.S. Department of Education (ED) and transferring the management of federal student loans to the Small Business Administration (SBA). If you’re currently enrolled in an online degree program—or considering starting one—this development could significantly impact your financial aid options. At FocusQuest, we want to ensure you have the information and support you need to navigate this transition with confidence.
What’s Changing?
The proposal would dissolve the ED—long responsible for overseeing federal student aid programs—and move the entire $1.6 trillion student loan portfolio under the SBA. While the SBA has experience in managing large-scale loan programs, its focus has traditionally been on small business financing, not higher education.
Key Concerns for Students
- Disruptions in Loan Processing The SBA’s unfamiliarity with student loan infrastructure could result in delays or errors in processing federal aid. As adult learners balancing work and family commitments, any delay in financial aid could disrupt your course enrollment or ability to purchase learning materials.
- Uncertainty Around Income-Driven Repayment Plans Federal programs such as Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) may undergo revisions—or potentially face elimination. These programs are especially important for adult learners who often juggle education alongside full-time employment or public service roles.
- Pell Grants and Financial Support Pell Grants, a key source of non-repayable aid for many online students, are currently managed by the ED. It’s unclear whether the SBA would continue offering such grants, or under what terms.
- Record-Keeping and Servicing Issues Transferring millions of loan records from one agency to another could lead to data loss or servicing errors. Students may face challenges in accessing accurate payment histories or applying for deferments.
What You Can Do Now
Current Students
- Stay Updated
Follow credible news sources and official government communications. Check updates directly from studentaid.gov for the latest. - Download and Store Your Records
Keep digital and hard copies of your financial aid documents, loan agreements, and repayment history. - Consider Contingency Plans
If you’re close to graduation, assess how possible delays might affect your final semester. Explore whether your institution offers emergency financial support. - Engage With Your Institution
Many online universities, including FocusQuest, are preparing to support students during this potential transition. Reach out to your advisor for personalized guidance.
Prospective Students
- If you’re considering enrolling in a degree program, now is the time to act.
- Changes to federal financial aid may impact future eligibility and funding availability.
- FocusQuest encourages all prospective students to take advantage of current aid programs while they are still in place.
- Don’t wait until uncertainty affects your educational plan
- Contact FocusQuest today to speak with an advisor and take the next step toward your degree.
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What the Closure of the U.S. Department of Education Could Mean for Current & Future Students (By Chad Williamson)