Taste Of Capital
  • Politics
  • Investing
  • Business
  • Stock
Home Investing Supreme Court backs 1,400 layoffs at US Education Department
Investing

Supreme Court backs 1,400 layoffs at US Education Department

by admin July 19, 2025
July 19, 2025

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.

The post Supreme Court backs 1,400 layoffs at US Education Department appeared first on Invezz

previous post
JPMorgan initiate coverage on OpenAI, to start coverage on private companies
next post
Trump has now been in office for six months, for the second time. Here are the highlights

Related Posts

US visa bans on Brazilian judges spark diplomatic rift, cloud...

July 20, 2025

China’s Neta and Zeekr inflated EV sales using pre-sale insurance...

July 20, 2025

The new global demographic challenge: not too many, but too...

July 20, 2025

JPMorgan initiate coverage on OpenAI, to start coverage on private...

July 19, 2025

Netflix continues to attract ad dollars as it offers ‘holy...

July 19, 2025

Sarepta shares fall 37% as FDA questions future of key...

July 19, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Stock News

    • China’s Neta and Zeekr inflated EV sales using pre-sale insurance tactics: here’s what we know

      July 20, 2025
    • Top catalysts for the German DAX Index this week

      July 20, 2025
    • Top CAC 40 shares to watch: LVMH, BNP Paribas, Vivendi and more

      July 20, 2025
    • Bank of America reveals trades investors can do if Trump fires Jerome Powell

      July 19, 2025
    • Netflix continues to attract ad dollars as it offers ‘holy trinity’ to advertisers

      July 19, 2025
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TasteOfCapital.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.
    Copyright © 2025 TasteOfCapital.com All Rights Reserved.

    Taste Of Capital
    • Politics
    • Investing
    • Business
    • Stock