The Department of Education’s Office of Inspector General has put hard numbers on the Trump administration’s push to dismantle the agency, and the findings for Federal Student Aid are stark: entire sub-offices responsible for overseeing loan servicers and certifying schools for federal aid were left with no employees at all.
The report lands as the Department reverses course. FSA is now hiring roughly 380 workers back and held a two-day hiring fair in Washington, D.C. on July 21 and 22 to fill more than 100 open roles.
The flash report covers changes to ED’s staffing, operations, contracts, and grants between January 20 and March 31, 2025 – the window that opened with two executive orders directing agencies to prepare for large-scale reductions in force.
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Why It Matters
FSA is the operation behind every federal student loan and Pell Grant in the country. In fiscal year 2025, it processed roughly 19.2 million FAFSA forms and delivered more than $131.1 billion in Title IV aid to 10.5 million students across 5,280 institutions.
The report documents which parts of the Department were hollowed out, despite the fact that several of them exist because Congress requires it.
By The Numbers
Department-wide, the reduction in force touched 16 of ED’s 17 offices. It was challenged in court and ultimately allowed to proceed by the Supreme Court:
- 3,902 employees as of January 20, 2025
- 1,227 separated through RIF actions
- 352 (at least) separated voluntarily through deferred resignation, early retirement, or incentive payments
- 1,579 total departures — a 40% cut
Within Federal Student Aid (FSA) specifically:
- 1,446 employees across 136 suboffices on January 20, 2025
- 72 suboffices, covering 918 employees, hit by the March 11, 2025 RIF
- 411 separated by RIF, 174 through other means
- 861 employees estimated remaining — also roughly a 40% reduction
Those figures cover only the first ten weeks. ED cut another 20% of its remaining staff during the government shutdown later on.
The Details
Of the 72 FSA sub-offices affected, 55 retained half or fewer of their staff. Thirty-two were left with none.
Among the functions with no remaining employees: overseeing guaranty agencies, lending institutions, and the servicers that manage federal loans, and administering eligibility, certification, financial analysis, and oversight of schools in FSA programs. OIG identified both as statutory responsibilities, echoing a separate GAO finding that servicer oversight reviews had been halted entirely.
Also zeroed out: the teams managing Cohort Default Rates, ScoreCards, and Gainful Employment rate calculations (the metrics used to decide which college programs keep access to federal aid) plus FSA’s enterprise risk management and human capital operations.
Offices reduced to 50% staffing or less included those running the myStudentAid mobile app and FSA’s customer website, Title IV portfolio oversight, Next Gen FSA, and primary IT services for all FSA systems.
FSA terminated four contracts and descoped four more, covering procurement reviews, internal control assessments, DEIA training, and maintenance of FSA’s Digital and Customer Care application. It awarded nine new ones tied to loan servicing and default management, including $247.4 million for Perkins Loan servicing and $188.5 million for the Debt Management and Collections System, the machinery now aimed at $179 billion in defaulted debt.
Department-wide, ED terminated 129 contracts worth $1.3 billion and 90 grants worth $504 million, while awarding 77 new contracts worth $610.4 million and 15 new grants worth $22 million.
ED pushed back on the draft, arguing the report implied statutory duties were going unperformed. OIG responded that the Department provided no corroborating evidence it had continued discharging those responsibilities, and made no changes to the final report.
How This Connects
The consequences have been visible to borrowers for months. As of April 2026, 530,295 borrowers were still stuck in the income-driven repayment application backlog, even after a record processing month. Senator Elizabeth Warren has separately asked the GAO to quantify what the loss of college oversight capacity has cost.
The Department is now trying to staff back up. Internal documents reported in May put FSA at 731 full-time equivalent employees, down from 1,440, with the office seeking to add 334 more, roughly 380 hires in total. Fifty-two had been onboarded since September 2025.
Last week, FSA held an in-person hiring fair in Washington, D.C., advertising more than 100 open positions, and is currently recruiting principal-level engineers, product managers, and designers alongside roles posted on USAJOBS. Education Secretary Linda McMahon told the House Education and Workforce Committee on May 14 that she is rehiring attorneys for the Office for Civil Rights as well.
Even if they onboard these positions, the hiring would leave FSA below where it stood in January 2025 and it does not directly address the suboffices OIG found emptied out, since the new roles skew toward technology rather than servicer and school oversight.
Don’t Miss These Other Stories:
Warren Asks GAO To Probe Whether Education Department Cuts Have Crippled College Oversight
Pell Grant Eligibility Jumped 31% After FAFSA Simplification, GAO Finds
GAO: FSA Halted Student Loan Servicer Reviews
Editor: Colin Graves
The post OIG Report: Education Department Cut 40% Of Staff, Gutting Student Loan Oversight appeared first on The College Investor.
