Why Gen Z Should Pay Close Attention

You’ve probably heard headlines about the federal government planning to shrink or even dismantle the U.S. Department of Education. But what does that actually mean for you, especially if you’re a Gen Z student or borrower?

Spoiler: It’s not just political drama—it could seriously impact how you apply for aid, repay student loans, or access forgiveness in the years ahead.

Here’s what’s happening and how it could affect your finances.

What’s Going On?

In mid-2025, the Trump administration announced plans to cut staffing and functions at the Department of Education, following a Supreme Court decision that allows broader executive control over federal agencies.

• Over 1,300 employees could be laid off.
• Key programs like federal student aid, civil rights enforcement, and special education may be shifted to other agencies—or defunded altogether.
• The proposed changes come alongside the One Big Beautiful Bill, which is already reshaping student loan rules.

So What Does That Mean for Student Loans?

Here’s how Gen Z borrowers and students could be directly impacted:

1. Fewer Repayment Options

The DoE has already started consolidating repayment plans. Soon, there may only be two:

• Standard 10-Year Repayment
• Repayment Assistance Plan (RAP) – up to 30 years

This move will eliminate flexible income-driven repayment plans (like SAVE and PAYE) after 2028, many of which were managed through the DoE’s Federal Student Aid office.

Why It Matters:
Without these options, many borrowers—especially those with lower incomes—could face higher monthly paymentsand longer payoff timelines.

2. Slower Customer Service and Application Processing

With a smaller staff, expect longer wait times, slower responses, and delays in FAFSA, loan disbursement, and payment updates.

• FAFSA delays could affect financial aid awards for millions of students.
• Error corrections on student loan accounts may take weeks or months longer.

Why It Matters:
Your college enrollment or financial stability could be disrupted just because paperwork takes longer to process.

3. Reduced Oversight of Loan Servicers

The DoE plays a key role in monitoring student loan companies to ensure they follow the rules. If it’s downsized:

• Servicers may make more mistakes, like incorrect balances or missed payments.
• Borrowers may lose out on forgiveness eligibility due to clerical errors.

Why It Matters:
Less oversight means you need to self-advocate harder. Double-check every statement and contact your servicer early and often.

4. Fewer Paths to Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program and Teacher Loan Forgiveness rely on DoE processing and verification. With staffing cuts:

• PSLF applications could be delayed or denied due to processing backlogs.
• Fewer borrowers may get accurate credit toward forgiveness.

Why It Matters:
If you’re pursuing forgiveness through public service or teaching, apply as early as possible and keep detailed recordsof payments and employer certifications.

5. 📉 Less Access to Emergency Relief

During COVID, the DoE paused payments, suspended interest, and offered special deferment protections. A weaker DoE could mean:

• No fast federal response in the next economic crisis
• Harder access to deferment or forbearance for those unemployed or underpaid

Why It Matters:
Future relief programs may not be as generous—or may not exist at all—if there’s no department to roll them out quickly.

What Gen Z Should Do Now

You don’t have to panic—but you do need to prepare. Here’s how:

1. Review Your Loan Details

Log into studentaid.gov and:

• Verify your loan balance and interest rate
• See what repayment plan you’re on
• Update your contact info so you don’t miss notices

2. Switch to an Income-Based Plan ASAP

If you’re eligible for SAVE or PAYE, enroll before they’re phased out.

3. Document Everything

• Keep records of every payment
• Save PDFs of your PSLF certifications or payment history
• Screenshot your servicer portal regularly

4. Explore Alternative Routes

If you’re planning to take out loans:

• Look into community college, trade school, or online certifications first
• Prioritize schools with strong career placement and low debt loads

5. Vote and Stay Informed

Policy changes are political. Stay aware of:

• Who’s in charge of student loan policy
• What candidates are promising about education and debt
• What bills (like the OBBBA) might become law

Final Thoughts

The potential downsizing of the Department of Education isn’t just about bureaucracy—it’s about your money, your education, and your future.

Gen Z is the most educated generation in history, but also the most burdened by debt. As the rules keep changing, the best thing you can do is stay informed, stay organized, and stay proactive.