The proposed dismantling of the U.S. Department of Education (DOEd) could end up increasing costs for American taxpayers by approximately $11 billion per year while delivering worse educational outcomes, according to recent analysis.
Currently operating with a $202 billion budget, the DOEd distributes around $143 billion directly to students and colleges through loans and grants. Without federal funding, states would need to increase their education budgets by roughly 28% just to maintain current service levels.
No state currently has sufficient budget surplus to absorb their portion of this massive funding gap. This would likely force states to either raise taxes across all income levels or significantly reduce student aid, potentially leading to declining college enrollment and job losses on campuses.
While dismantling the federal department could save about $1.8 billion in administrative costs, oversight challenges would multiply. Instead of one centralized agency that can be efficiently audited, 50 separate state departments would need to manage expanded programs, increasing opportunities for waste and misappropriation.
States would also face new burdens funding special education and supporting schools in low-income areas. Many would likely be forced to consolidate or close schools, resulting in larger class sizes and longer student commute times. Academic performance, already struggling in some regions, could deteriorate further.
The financial impact would hit states unevenly. States like Mississippi would need to allocate a larger percentage of their budget compared to states like Vermont. Additionally, states would have to absorb losses from student loan defaults, which are currently handled at the federal level.
While proponents claim the move would save money and empower states, the analysis suggests it would achieve the opposite - costing taxpayers more while reducing educational resources, expanding class sizes, and potentially limiting college access for lower-income students.
Even accounting for potential savings in administration and loan disbursement, the broader economic effects of reduced college attendance combined with likely tax increases would result in approximately 5% higher educational costs for taxpayers - translating to an additional $11 billion annually for diminished services.