Federal Update - March 26

March 26, 2025

GOVERNMENT RELATIONS HIGHLIGHTS

Schumer for the Assist: Senate Democrats helped prevent a government shutdown

Reconciliation Baby Steps: Republicans do not yet have a framework for this year’s most important bill

RIF-ED: The massive reduction-in-force will permanently reshape ED

ED Stakeholder Letter: Bergeron asks for education stakeholder feedback

Student Loan Hot Potato: The $1.7 trillion Direct Loan program remains at ED, for now

Deeper Dive: Executive Order on Eliminating ED: Will the agency go away, and what does it mean for you?

GOVERNMENT SHUTDOWN AVERTED

What You Need to Know

After days of bitter intra-caucus feuding, Senate Minority Leader Schumer (D-NY) announced on March 13 that he would vote for the House Republicans’ continuing resolution. Schumer and a handful of other Senate Democrats played a critical role in averting a shutdown, though Democrats got none of their priorities in the bill. Schumer has been subsequently pummeled by unhappy Democrats across the political spectrum.

Why This Is Important

This funding patch maintains FY2024 funding levels until September 30. Congress has thus shirked their Article I power by skipping FY2025 appropriations altogether. The FY2026 appropriations process has already begun, with hearings and markups anticipated to begin by late spring. The government relations team will closely monitor any developments that may impact our sector.

CONGRESS INCHES FORWARD ON RECONCILIATION

What You Need to Know

House and Senate Republicans are meeting this week to discuss their competing budget resolutions. Significant differences persist between the House and Senate budget blueprints. Senate Republicans are concerned about the extensive cuts proposed by the House, particularly those affecting Medicaid. Speaker Johnson has urged the Senate to accept the House budget resolution as-is.

Why This is Important

The House budget proposes monumental cuts to education programs, totaling $330 billion. For the reconciliation process to move forward, both chambers must pass identical budget resolutions. Congressional Republicans hope to have a final framework soon so they can get to writing what is expected to be the most significant piece of legislation this year.

ED REDUCTION IN FORCE

What You Need to Know

On March 11, the Trump Administration announced a substantial reduction in force (“RIF”). Of the impacted positions, FSA and the Office for Civil Rights appeared to be hardest hit, followed by the Institute of Educational Sciences. According to self-reported figures, ED’s workforce has been reduced from approximately 4,130 to 2,180 since Inauguration Day. All FSA case teams appear to have been eliminated, except for Chicago and Philadelphia. 

Why This is Important



Among the recent developments at ED, the RIF is likely to have the most significant practical impact on schools in the near-term. Cuts to FSA case teams may delay many institution-facing functions. These could include items like issuing policy guidance; technical assistance with the ED’s online platforms, like the E-App; certification and recertification; review of annual audit submissions; program reviews; and processing changes in ownership and control.

On March 14, ED issued guidance revealing that FSA will now respond centrally to all questions related to school eligibility and the E-App. Moving forward, institutions have been instructed to email CaseTeams@ed.gov with all such inquiries.

ED LETTER TO STAKEHOLDERS

What You Need to Know

On March 14, Acting Under Secretary Bergeron published a letter addressed to education stakeholders. The letter focused on ED’s goal of “removing bureaucratic excesses from the Department.” The letter states that “no employees working on core functions of the Free Application for Federal Student Aid (FAFSA) or student loan servicing were impacted by the RIF” and asks stakeholders to provide feedback, if they experience “any immediate operational impact concerns.”

Why This is Important

The Trump Administration’s gutting and reshaping of ED will have far-reaching impacts, which will include revising or eliminating regulations and reducing compliance requirements for institutions. If you have operational questions for ED, get ready! Acting Under Secretary Bergeron will be joining AACS at Hill Day.

DIRECT LOANS REMAINING AT ED

What You Need to Know

On March 21, President Trump announced that the Small Business Administration (SBA) “will handle all of the student loan portfolio.” On the same day, White House Press Secretary Levitt stated that the Direct Loan program will remain at ED. Before and since the President’s announcement, the US Department of the Treasury, among other agencies, has been floated as a potential home for the program.

Why This is Important



Congress delegated authority on federal student loans to ED, moving the Direct Loan program to another agency would require congressional action. On the same day President Trump revealed that SBA would be handling the student loan portfolio, SBA announced that it would be reducing its personnel by 43%.

DEEPER DIVE: EXECUTIVE ORDER ON ELIMINATING ED

What You Need to Know

AACS reported on March 20 that President Trump finally signed an executive order directing Education Secretary McMahon to wind down operations at ED “to the maximum extent appropriate and permitted under law.” The executive order instructs Secretary McMahon to ensure that ED continues to deliver its congressionally authorized services, programs, and benefits. The executive order does not specifically ask Congress to take the necessary legislative steps to eliminate ED and redistribute its programs to other agencies.

Why This is Important

The White House has repeatedly conceded that eliminating ED will require congressional approval. The Administration has been consistent in its message on that point, including during Secretary McMahon’s confirmation hearing. Senate HELP Committee Chair Cassidy (R-LA) has publicly committed to introducing legislation to shut down ED. Passage of this legislation is unlikely in the Senate, however, due to unified Democratic opposition and consistent Republican support for many ED programs. ED will remain our sector’s primary federal regulator unless and until Congress acts. Senator Cassidy will be providing a keynote at AACS Hill Day in April.