The US Supreme Court has allowed the Trump administration to proceed with sweeping staff cuts at the Department of Education, lifting a lower court injunction that had paused layoffs of around 1,400 employees in March.
The decision has intensified operational concerns at a time when millions of student loan borrowers are facing renewed interest payments, while schools report widespread difficulties in accessing financial aid services.
The Education Department is now functioning with half its pre-March workforce in some areas, prompting questions about its ability to fulfil core responsibilities.
Injunction overturned despite agency’s federal obligations
In May, a federal judge in Massachusetts had issued a temporary injunction, arguing that the mass reduction in force would compromise the department’s ability to perform duties mandated by Congress.
These include managing financial aid programmes, ensuring compliance with civil rights regulations, and supporting students with special needs. The Supreme Court’s ruling on Monday reversed that decision without providing an explanation.
Justices Ketanji Brown Jackson, Elena Kagan and Sonia Sotomayor dissented in a 19-page opinion, but the court’s majority sided with the administration’s position.
The layoffs were announced as part of President Donald Trump’s broader agenda to shrink the federal role in education and transfer more power to states.
Although dismantling the department altogether would require congressional action, the workforce cuts represent a significant step in that direction.
Financial aid offices report delays, confusion after layoffs
Even before the Supreme Court ruling, signs of operational stress had surfaced.
A May survey of 900 educational institutions by the National Association for Student Aid Administrators (NASFAA) found that over 40% of respondents were already experiencing issues with financial aid processes.
Reported problems included delays in disbursement, unresolved queries, and miscommunication with the federal agency.
NASFAA issued a statement following the court’s decision, expressing doubts about the department’s ability to continue supporting colleges and students in administering essential programmes.
The association’s president, Melanie Storey, highlighted the need for consistent support and timely communication, particularly as more students rely on federal aid to access higher education.
Loan servicing backlog hits 1.5 million borrowers
The layoffs coincide with significant policy shifts affecting student loan repayment.
The Education Department recently resumed interest accrual for borrowers enrolled in the Saving on a Valuable Education (SAVE) income-driven repayment plan.
Borrowers wishing to avoid accruing interest — estimated at roughly $300 per month for the average loan holder — must switch to alternative repayment plans or begin making monthly interest payments.
However, with staff reductions and system delays, many borrowers are unable to reach support agents or receive timely updates on their applications.
As of June, the department was still processing over 1.5 million pending income-driven repayment (IDR) plan applications, according to court filings. That figure reflects only a 4.5% decrease from the end of May.
While the department has attributed the backlog to a temporary processing pause during President Joe Biden’s tenure, Federal Student Aid — the unit overseeing loan services — has lost about 50% of its staff.
The staffing drop stems from both pre-layoff buyouts and the March layoffs, according to a report by NPR.
Legal and operational uncertainty remain
Secretary of Education Linda McMahon welcomed the Supreme Court ruling, reiterating the department’s commitment to fulfilling its statutory obligations despite the leaner workforce.
The administration maintains that by streamlining operations and reducing federal oversight, it aims to return decision-making power to local entities while cutting bureaucratic inefficiencies.
However, critics warn that the timing of the workforce cuts — just as federal loan interest restarts and programme adjustments take effect — may leave borrowers without the support they need.
As backlogs grow and communication lapses deepen, questions remain over whether the department can maintain adequate service levels during a critical period of transition for student financial aid in the US.
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