President Donald Trump’s plan to dismantle the federal Department of Education will not cause widespread financial issues for public schools, according to S&P Global Ratings. The credit-rating agency stated that while some K-12 education providers may experience operational challenges, large-scale financial deterioration or credit downgrades are not expected.
Last Thursday, Trump signed an executive order eliminating the U.S. Department of Education and returning education policy control to individual states. Under the order, the department’s responsibilities will be reassigned to other federal agencies.
“Public K-12 schools currently receive the majority of their annual revenues from state and local funds, and all 50 states operate their own departments of education and, therefore, determine how school operations are funded,” said Jane Ridley, an S&P Global Ratings credit analyst. “Should federal funding to K-12 schools decrease, we expect that each state will determine its response to the shifts.”
Legal experts point out that Congress must approve the department’s closure or any funding reductions, as its establishment was codified in 1979 through legislation signed by President Jimmy Carter. The Department of Education currently oversees compliance with Title IX and federal civil rights laws, collects school data, and manages federal student loan and grant programs, including Pell Grants and $1 trillion in outstanding FAFSA loans. It also accounts for approximately 10% of public education funding nationwide, with the remainder coming from state and local taxes.
Teacher unions and Democratic lawmakers have already signaled plans to challenge Trump’s executive order in court, arguing that the move could undermine federal education oversight.
