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Trump Administration Uses Interagency Deals to Dismantle Education Department, Shift Student Loans to Treasury
The Trump administration has been winding down the Education Department — cutting staff nearly in half to about 2,300, announcing a move out of the Lyndon B. Johnson headquarters to a smaller office in August 2026, and executing multiple interagency agreements that transfer ED functions to other agencies. A recent deal shifts much federal student‑loan management, including defaulted‑loan collections and some repayment support, to the Treasury Department; officials call the agreements a “proof of concept” for returning education to the states and ultimately closing the agency, though a senior ED official conceded Treasury cannot legally assume all statutory loan obligations and only Congress can formally abolish the department.
📌 Key Facts
- Education Secretary Linda McMahon announced all Education Department staff will leave the Lyndon B. Johnson (LBJ) headquarters and relocate to a smaller office at 500 D Street SW in August 2026; the Energy Department is slated to move into LBJ, with the administration citing more than $350 million in deferred‑maintenance savings at Energy’s current site.
- McMahon and other administration officials say the move and wind‑down are a "critical step" in returning education authority to the states and advancing President Trump’s pledge to eliminate the department, arguing ED is largely a funding "pass‑through" whose core functions can be handled elsewhere.
- The Education Department has cut staff nearly in half, to about 2,300 employees, as part of an internal wind‑down.
- The administration has executed roughly nine to ten interagency agreements over the past year transferring Education functions to other federal agencies, including a major agreement moving much federal student‑loan management — such as defaulted‑loan collections and some repayment support — to the Treasury Department.
- Officials frame the interagency deals as a "proof of concept" to demonstrate to Congress that federal grants and loans can continue without a standalone Education Department and to pave the way for legislatively closing the agency.
- A senior Education Department official acknowledged Treasury cannot legally assume all of Education’s statutory loan obligations and that only Congress can fully close the department.
- Critics, including Rep. Bobby Scott, say the relocation and interagency transfers are largely symbolic and mask a broader effort to shrink the federal role in ensuring equal access to quality education; Undersecretary Nicholas Kent told Fox News Digital that department staff are "working to put themselves out of a job" as they wind down ED.
📰 Source Timeline (3)
Follow how coverage of this story developed over time
March 27, 2026
11:00 AM
Department of Education employees are working every day to put themselves 'out of a job,' but why?
New information:
- Undersecretary of Education Nicholas Kent told Fox News Digital that department staff are ‘working to put themselves out of a job’ by winding down ED and returning power to states at President Trump’s direction.
- The administration has signed what an official calls the ‘largest’ step toward shutting ED: an interagency agreement transferring federal student‑lending operations, including defaulted‑loan collections and some repayment support, from Education to the Treasury Department.
- Officials frame a series of nine interagency agreements over the past year as a ‘proof of concept’ to show Congress that federal grants and loans can continue without a standalone Education Department, with the ultimate goal of legislatively closing the department.
- Secretary Linda McMahon reiterates that ED is essentially a funding ‘pass through’ rather than a curriculum‑setting body, arguing its core functions can be handled elsewhere as the agency prepares to vacate the LBJ building so the Energy Department can move in.
1:51 AM
The depleted Education Department will move out of its headquarters
New information:
- Education Secretary Linda McMahon formally announced that all Education Department staff will leave the Lyndon B. Johnson headquarters building, with relocation to a smaller office at 500 D Street SW scheduled for August 2026.
- The Department of Energy is slated to move into the LBJ building from its current home in the James V. Forrestal building, with the administration claiming more than $350 million in deferred maintenance savings at Energy’s current site.
- McMahon told staff in an internal email that leaving the LBJ building is a "critical step in returning education to the states," tying the move directly to President Trump’s pledge to eliminate the department.
- The article reiterates that McMahon has already cut Education Department staff by nearly half, to about 2,300 employees, and has executed 10 agreements to transfer functions to other federal agencies, including a recent deal to shift much federal student loan management to the Treasury Department.
- A senior Education Department official concedes that Treasury cannot legally assume all of Education’s statutory loan obligations, acknowledging that only Congress can fully close the department despite the internal wind‑down.
- Rep. Bobby Scott, ranking member on the House education committee, publicly criticizes the move as symbolism masking a broader effort to shrink the federal role in ensuring equal access to quality education.