A new inspector general report from the U.S. Department of Education released Tuesday found that the department’s Federal Student Aid office lost roughly 40% of its workforce during DOGE-era staffing cuts.
Federal Student Aid, or FSA, is the office that manages the federal government’s $1.7 trillion student loan portfolio, including repayment systems, borrower support and servicer oversight.
According to the Department of Education’s Office of Inspector General, FSA staffing fell from 1,444 employees in January 2025 to 861 by May 2025.
The cuts were part of the Trump administration’s DOGE-led restructuring effort launched in early 2025 to reduce the federal workforce and streamline government spending. At the Education Department, the initiative triggered mass layoffs, buyouts and contract cuts as Trump continued pushing to shrink the agency.
Oversight Functions Shrink
The report said several offices responsible for key oversight and borrower-facing functions were among the hardest hit.
Some of the most affected teams oversaw loan servicers and lenders, while others handled the Federal Student Aid website, the myStudentAid mobile app, IT systems and risk assessment for aid programs.
The report offers one of the clearest pictures yet of the impact of the Trump administration’s broader push to shrink the Education Department and move responsibilities across agencies.
Earlier this month, the administration announced new interagency partnerships shifting some Education Department functions to agencies including the Justice Department, the Department of Health and Human Services and the Treasury Department as part of President Donald Trump’s long-term goal of reducing the department’s size.
Sen. Elizabeth Warren (D-Mass.), who requested the report in March 2025, said Tuesday that Americans deserve to know how the administration’s restructuring is affecting education programs, according to Business Insider.
Repayment Changes Near
The staffing cuts come at a critical time for borrowers.
Starting July 1, the Trump administration’s student loan overhaul will introduce new repayment options, including the Repayment Assistance Plan and Tiered Standard repayment plan, while millions of borrowers continue transitioning out of the now-defunct SAVE plan.
More than 300,000 borrowers have already exited SAVE, but millions remain in transition. Borrowers still enrolled in the program are expected to receive notices from loan servicers around July 1 and will generally have about 90 days to choose a new repayment plan.
Repayment stress has already been building. Federal Reserve Bank of New York data showed delinquent student debt climbed to a record $171.4 billion in the first quarter of 2026.
In a response included in the inspector general report, Department of Education Deputy General Counsel Philip Rosenfelt said ongoing litigation related to the staffing reductions limited the information the department could provide.
The report does not conclude that repayment systems have failed, but it says staffing cuts weakened oversight and raised operational risks at a critical time for federal student loan borrowers.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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