Education
States brace for Trump’s plans to dismantle the Education Department
President Donald Trump has set his sights on abolishing the U.S. Education Department and has said he’d prefer to put education policy in the hands of the states.
But that may not be so simple, with state officials and lawmakers saying they’re wildly unprepared for such a huge undertaking.
NBC News reported this month that the White House is preparing an executive order to eliminate the agency, though the details of how that would work remain unclear. Trump cannot unilaterally get rid of a federal agency without congressional approval, and his nominee for education secretary, Linda McMahon, agreed at her recent Senate confirmation hearing that they hope to present a plan that Congress will support.
At a Cabinet meeting Wednesday, Trump reiterated his plans for major changes at the agency, saying that “we want to move education back to the states where it belongs.”
Conservatives have for decades circulated an array of ideas on how to abolish or diminish the Cabinet-level agency — plans that include transferring key responsibilities within the department to other federal offices, as well as moving funds and oversight to the states.
Yet, in the absence of specifics, the White House’s broader plan has been met with confusion and big questions from state lawmakers and education officials from both parties who would be tasked with filling in the gaps most likely to arise if and when the department is ended or curtailed.
While some state lawmakers are quietly attempting to develop modest contingency plans, most say they have no choice but to wait for the details to emerge and then scramble to make sure their states can absorb whatever additional responsibilities come their way.
“There’s no solid [federal] plan, so we don’t even know what to plan for,” said Connecticut state Rep. Maryam Khan, a Democrat and a former teacher and local board of education member. “If there’s just an implementation of something, all of a sudden, there’s no way any state can plan that quickly. There would be huge burdens on states to try to figure out something within a very small time frame.”
The largest questions revolve around who would pick up many of the agency’s most crucial responsibilities — among them, the disbursement and oversight of funding for schools with extra needs, including schools with large populations of impoverished students or schools with children with disabilities.
Another major question is how state governments would fill in huge funding gaps for other critical programs the federal agency manages, and whether they’re remotely prepared to jump in if the department is dismantled.
“You can’t just move dollars like that without downstream impacts on individual districts,” said Joshua Cowen, an education policy professor at Michigan State University. “Like rural communities that really rely on the ability to easily, quickly interface with their own state agency and with the U.S. Department of Education to just get what they need, get decisions made, get dollars cleared.”
States could get much more responsibility
In addition to managing the federal student loan portfolio for college students and post-secondary students, the Education Department is charged with distributing millions of dollars in funding for K-12 schools through programs that serve more than 50 million students in almost 100,000 public schools and 32,000 private schools.
That includes funding for thousands of so-called Title I schools — schools that receive federal dollars to help low-income families — as well as for programs that ensure disabled students have access to a free and appropriate public education. In addition, the agency’s Office for Civil Rights enforces laws that aim to prevent discrimination in schools.
The White House has shared little about its plans. Responding to questions about the timing or possible details of a potential executive order regarding the agency, White House spokesperson Harrison Fields said in a statement, “As promised, President Trump will explore options to empower the states, promote educational freedom, prioritize parents over politicians, and restore greatness to our education system.”
A spokesperson for the Education Department didn’t respond to questions about potential changes.
But conservatives have long discussed plans of what they’d like to see happen with the Education Department.
The largest element of some proposals include moving critical functions of the agency to other federal departments. Most prominently, some conservative activists have advocated for transferring federal student loan programs to the Treasury Department (Republican-sponsored U.S. House bills filed last month by Reps. Thomas Massie, of Kentucky, and David Rouzer, of North Carolina, that seek to eliminate the agency propose this) and civil rights enforcement issues in public schools to the Civil Rights Division of the Justice Department.
The concept of abolishing the whole agency was pushed by Project 2025, which also advocated for ending Title I funding in phases. Other advocates for conservative education policy have said the federal government should convert most of the funding it gives to states for K-12 programs into block grants, a form of funding that comes with fewer and less onerous rules and federal oversight.
As a result, state lawmakers are largely anticipating having to figure out how to plan for a number of contingencies, including: How to account for or make up for the spending they rely on for Title I schools and schools that must accommodate students with disabilities; how to manage oversight and accountability for schools that would then get that funding; and whether block grants are in their future.
But in interviews, state lawmakers and education officials made clear that few plans are underway for how states would deal with such a broad new framework.
“Absolutely not,” North Carolina Democratic state Rep. Julie von Haefen said when asked if legislators were preparing for how to react to changes in federal funding for public education or how to deal with a shifting civil rights violation enforcement framework. A former PTA president in Wake County and a current substitute teacher, she focuses her attention in the state House on education issues.
“And in North Carolina, we’re at a really precarious point in our state funding — the loss of federal funding would really be devastating. It’s kind of a perfect storm right now, because last year, we greatly expanded our private school voucher program.” she added.
Iowa state Rep. J.D. Scholten, a Democrat who represents a rural and suburban area around Sioux City, offered a similar assessment of his state’s readiness.
“Not at all,” he said. “We’re not prepared for it, we’re not preparing for it.”
Republican state policymakers who are advocating for cuts or abolishment of the Education Department also acknowledged that state governments aren’t anywhere near ready to anticipate the drastic changes that could be coming.
“It is hard to plan, and that’s why we’re really waiting on the details,” said Susie Hedalen, a Republican and Montana’s superintendent of public instruction, the top education official in the state.
Hedalen said she didn’t know what cuts to expect but was open to the feds transferring some of their work to states. She had asked her congressional representatives and checked with the Agriculture Department on funding that feeds school children and agreed it was difficult to plan, and stressed that she had no indication the funding they currently relied on would be cut.
To try to reassure her schools, she wrote a “Dear Colleague” letter affirming that funds hadn’t yet been cut. Still, Hedalen said, she supported getting rid of the Education Department.
“The reporting requirements and the burdens that come along with not only having to report to the state office of public instruction on how you’re utilizing those funds but also having to report to the Department of Education just creates burdens on our school districts. My hope is this results in reduced red tape and federal oversight and overreach,” she said.
Public education advocates warned more broadly that a shift in federal education funding to block granting could set the stage for red states pouring dollars into private schools. (Under some GOP proposals, Title I funding for the poorest schools would shift to allow individual poor pupils to take that money to private schools if they chose.)
This month, 12 top education officials from GOP-controlled states wrote to McMahon, who has not yet received a full Senate vote on her nomination, to pitch her on giving out federal school funding as block grants. Those Republicans said they want to be allowed to shift money around for “state-driven initiatives” and “alternative spending approaches,” and asked McMahon to grant them waivers on certain federal requirements that come with their allocations.
But private schools that do not receive federal funding are exempt from civil rights laws, such as those barring discrimination based on a student’s race, gender or disability. Private academies also do not provide Individualized Education Plans to children with learning disabilities. It’s unclear whether any of these civil rights protections would apply, however, if states or school districts used federal dollars to support private K-12 schools under their proposed block granting schemes.
“It’s a much bigger transformation — not only government — but also of the legal landscape,” said Robert Kim, executive director of the nonprofit Education Law Center and an Education Department official during the Obama administration. “It could have profound implications for disadvantaged or at-risk populations like students with disabilities.”
Democratic lawmakers in some blue states, including Vermont and Connecticut, said they’d begun trying to at least envision a drastically altered Education Department.
Vermont lawmakers, for example, are “looking under every couch cushion, to know where our [education] dollars come from, that they’re accounted for … what are the holes that we have now, what holes would grow bigger if there were to be funding cuts from the federal level,” said state Rep. Mary-Katherine Stone, a Democrat.
Other blue state legislators and current Education Department employees warned that any declawing of the agency’s role in Title I and disability funding marked a fundamental threat to the federal right to a free and appropriate public education.
Laws and funding for Title I and disability services exist because of the failures to treat people with respect, noted one department employee, who requested anonymity because of retaliation fears, arguing that states lacked the resources to hold schools accountable.
“If it weren’t for federal action and federal money they wouldn’t be getting any education at all. If you take away the federal government’s ability to oversee states and schools in that regard,” the employee said, “how do you think states are going to treat students?”
A federal judge on Friday ordered that the Tufts University student who wrote an essay about Israel and the war in Gaza and is now fighting deportation must be transferred back to Vermont.
Judge William K. Sessions III stayed his order for four days to give the government a chance to appeal.
Rumeysa Öztürk, a 30-year-old Turkish national in the United States on a visa, is being held at an Immigration and Customs Enforcement detention center in Louisiana.
In Friday’s ruling, the judge refused efforts by the government to dismiss her habeas petition.
He found that Öztürk “has raised significant constitutional concerns with her arrest and detention.”
The Tufts doctoral student was arrested March 25 in Somerville, Massachusetts, and the Department of Homeland Security has accused her of engaging “in activities in support of Hamas.”
She co-wrote an opinion essay in 2024 for the student newspaper that called on Tufts to “acknowledge the Palestinian genocide,” which the undergraduate student government had demanded in a resolution.
The essay criticized university leadership for its response to the student government’s resolutions that it “disclose its investments and divest from companies with direct or indirect ties to Israel.”
“A university op-ed advocating for human rights and freedom for the Palestinian people should not lead to imprisonment,” one of her attorneys, Mahsa Khanbabai, said Friday. “Our immigration laws should not be manipulated to rip people away from their homes and their loved ones.”
Öztürk’s attorneys called Friday’s ruling a victory, and said that the federal government was trying to manipulate where her case would be heard so that it could try for its preferred outcome.
Friday’s ruling allows Öztürk to remain in ICE custody in Vermont while her habeas petition, which challenges her detainment, proceeds in federal court, as well as her removal case in immigration court in Louisiana.
The Department of Justice declined to comment Friday.
Öztürk is one of a number of international students in the U.S. on visas who the Trump administration is trying to deport for their actions protesting the conduct of Israel in its war against Hamas in Gaza, which it launched after the Hamas attacks on Israel on Oct. 7, 2023.
Tufts University has defended Öztürk and has petitioned that she be released from custody. The university said the opinion essay did not violate its policies and was in accordance with its position on free speech.
“The University has no further information suggesting that she has acted in a manner that would constitute a violation of the University’s understanding of the Immigration and Naturalization Act,” the university leadership said in a declaration earlier this month.
Harvard’s brewing conflict with the Trump administration could come at a steep cost — even for the nation’s richest university.
On April 14, Harvard University President Alan Garber announced the institution would not comply with the administration’s demands, including to “audit” Harvard’s students and faculty for “viewpoint diversity.” The federal government, in response, froze $2.2 billion in multi-year grants and $60 million in multi-year contracts with the university.
According to CNN and multiple other news outlets, the Trump administration has now asked the Internal Revenue Service to revoke Harvard’s tax-exempt status. If the IRS follows through, it would have severe consequences for the university. The many benefits of nonprofit status include tax-free income on investments and tax deductions for donors, education historian Bruce Kimball told CNBC.
Bloomberg estimated the value of Harvard’s tax benefits in excess of $465 million in 2023.
Nonprofits can lose their tax exemptions if the IRS determines they are engaging in political campaign activity or earning too much income from unrelated activities. Few universities have lost their non-profit status. One of the few examples was Christian institution Bob Jones University, which lost its tax exemption in 1983 for racially discriminatory policies.
White House spokesperson Harrison Fields told the Washington Post that the IRS started investigating Harvard before President Donald Trump suggested on Truth Social that the university should be taxed as a “political entity.” The Treasury Department did not reply to a request for comment from CNBC.
A Harvard spokesperson told CNBC that the government has “no legal basis to rescind Harvard’s tax exempt status.”
“The government has long exempted universities from taxes in order to support their educational mission,” the spokesperson wrote in a statement. “Such an unprecedented action would endanger our ability to carry out our educational mission. It would result in diminished financial aid for students, abandonment of critical medical research programs, and lost opportunities for innovation. The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America.”
The federal government has challenged Harvard on yet another front, with the Department of Homeland Security threatening to stop international students from enrolling. The Student and Exchange Visitor Program is administered by Immigration and Customs Enforcement, which falls under the DHS.
International students make up more than a quarter of Harvard’s student body. However, Harvard is less financially dependent on international students than many other U.S. universities as it already offers need-based financial aid to international students in its undergraduate program. Many other universities require international students to pay full tuition.
The Harvard spokesperson declined to comment to CNBC on whether the university would sue the administration over the federal funds or any other grounds. Lawyers Robert Hur of King & Spalding and William Burck of Quinn Emanuel are representing Harvard, stating in a letter to the federal government that its demands violate the First Amendment.
Harvard, the nation’s richest university, has more resources than other academic institutions to fund a long legal battle and weather the storm. However, its massive endowment — which has raised questions during the recent developments — is not a piggy bank.
Why Harvard’s endowment is so large
Harvard has an endowment of nearly $52 billion, averaging $2.1 million in endowed funds per student, according to a study by the National Association of College and University Business Officers, or NACUBO, and asset manager Commonfund.
That size makes it larger than than the GDP of many countries.
The endowment generated a 9.6% return last fiscal year, which ended June 30, according to the university’s latest annual report.
Founded in 1636, Harvard has had more time to accumulate assets as the nation’s oldest university. It also has robust donor base, receiving $368 million in gifts to the endowment in 2024. While the university noted that more than three-quarters of the gifts averaged $150 per donor, Harvard has a history of headline-making donations from ultra-rich alumni.
Kimball, emeritus professor of philosophy and history of education at the Ohio State University, attributes the outsized wealth of elite universities like Harvard to a willingness to invest in riskier assets.
University endowments were traditionally invested very conservatively, but in the early 1950s Harvard shifted its allocation to 60% equities and 40% bonds, taking on more risk and creating the opportunity for more upside.
“Universities that didn’t want to assume the risk fell behind,” Kimball told CNBC in March.
Other universities soon followed suit, with Yale University in the 1990s pioneering what would become the “Yale Model” of investing in alternative assets like hedge funds and natural resources. Though it proved lucrative, only universities with large endowments could afford to take on the risk and due diligence that was needed to succeed in alternative investments, according to Kimball.
According to Harvard’s annual report, the largest chunks of the endowment are allocated to private equity (39%) and hedge funds (32%). Public equities constitute another 14% while real estate and bonds/TIPs make up 5% each. The remainder is divided between cash and other real assets, including natural resources.
The university has made substantial portfolio allocation changes over the past seven years, the report notes. The Harvard Management Company has cut the endowment’s exposure to real estate and natural resources from 25% in 2018 to 6%. These cuts allowed the university to increase its private equity allocation. To limit equity exposure, the endowment has upped its hedge fund investments.
The endowment is not a piggy bank
University endowments, though occasionally staggering in size, are not slush funds. The pools are actually made up of hundreds or even thousands of smaller funds, the majority of which are restricted by donors to be dedicated to areas including professorships, scholarships or research.
Harvard has some 14,600 separate funds, 80% of which are restricted to specific purposes including financial aid and professorships. Last fiscal year, the endowment distributed $2.4 billion, 70% of which was subject to donors’ directives.
“Most of that money was put in for a specific purpose,” Scott Bok, former chairman of the University of Pennsylvania, told CNBC in March. “Universities don’t have the ability to break open the proverbial piggy bank and just grab the money in whatever way they want.”
Some of these restrictions are overplayed, according to former Northwestern University President Morton Schapiro.
“It’s true that a lot of money is restricted, but it’s restricted to things you’re going to spend on already like need-based aid, study abroad, libraries,” Bok said previously.
How Harvard is shoring up its finances
Harvard has $9.6 billion in endowed funds that are not subject to donor restrictions. The annual report notes that “while the University has no intention of doing so,” these assets “could be liquidated in the event of an unexpected disruption” under certain conditions.
Liquidating $9.6 billion in assets, nearly 20% of total endowed funds, would come at the cost of future cash flow, as the university would have less to invest.
Harvard did not respond to CNBC’s queries about increasing endowment spending. Like most universities, it aims to spend around 5% of its endowment every year. Assuming the fund generates high-single-digit investment returns, spending just 5% allows the principal to grow and keep pace with inflation.
For now, Harvard is taking a hard look at its operating budget. In mid-March, the university started taking austerity measures, including a temporary hiring pause and denying admission to graduate students waitlisted for this upcoming fall.
Harvard is also issuing $750 million in taxable bonds due September 2035. This past February, the university issued $244 million in tax-exempt bonds. A slew of universities including Princeton and Colgate are also raising debt this spring.
So far, Moody’s has not updated its top-tier AAA rating for Harvard’s bonds. However, when it comes to higher education as a whole, the ratings agency isn’t so optimistic, lowering its outlook to negative in March.
The Trump administration is continuing its battle against Harvard University — this time, canceling $2.7 million in grants and threatening to stop the enrollment of international students.
Homeland Security Secretary Kristi Noem on Wednesday announced the cancellation of two DHS grants to the school, declaring it “unfit to be entrusted with taxpayer dollars.”
Noem also said she sent a letter to Harvard demanding “detailed records” on foreign student visa holders’ “illegal and violent activities” by April 30.
If Harvard does not meet that deadline, it’ll immediately lose its Student and Exchange Visitor Program certification, she warned.
The release alleged Harvard’s foreign visa holders participated in riots and spewed antisemitic hate targeting Jewish students following the Hamas incursion against Israel on Oct. 7, 2023.
“If Harvard cannot verify it is in full compliance with its reporting requirements, the university will lose the privilege of enrolling foreign students,” a DHS news release said.
The two canceled grants were: an $800,303 grant for Implementation Science for Targeted Violence Prevention, which Noem said “branded conservatives as far-right dissidents in a shockingly skewed study,” and a $1.9 million Blue Campaign Program Evaluation and Violence Advisement grant that Noem alleged “funded Harvard’s public health propaganda.”
“Harvard bending the knee to antisemitism — driven by its spineless leadership — fuels a cesspool of extremist riots and threatens our national security,” Noem said in a statement. “With anti-American, pro-Hamas ideology poisoning its campus and classrooms, Harvard’s position as a top institution of higher learning is a distant memory. America demands more from universities entrusted with taxpayer dollars.”
It’s the latest punch by the Trump administration against the nation’s most prestigious university.
Earlier this week, the Trump administration announced that it would freeze more than $2 billion in grants to Harvard after the institution refused to accept demands that included auditing the viewpoints of its student body. Trump has also called for Harvard to lose its tax-exempt status.
On Monday, Harvard University’s lawyers sent a letter rejecting a list of demands from the Trump administration. In a statement posted online, Harvard President Alan Garber referred to the demands as “an attempt to control the Harvard community” and vowed to fight back.
A Harvard spokesperson told NBC News on Thursday that the school will “not surrender its independence or relinquish its constitutional rights,” while complying with the law.
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