Department of Education Dismantling: Funding Delays, Program Transfers, and Uncertainty for Schools and Exchanges

In late 2025, the Trump administration accelerated its longstanding plan to dismantle the U.S. Department of Education, triggering a series of sweeping changes that have left school leaders, educators, and international exchange advocates facing uncertainty and bureaucratic confusion. The vision, articulated by Education Secretary Linda McMahon, is to “break up the federal education bureaucracy and return education to the states.” But the reality, as reported by The 74 Million and The PIE News, is far more tangled than anticipated.

Funding Delays and Technical Hurdles

One of the most immediate and disruptive effects of the department’s dismantling has been the transfer of billions in federal K-12 funding to the Department of Labor. Traditionally, states received critical federal education funds in July—money needed for staffing, summer programs, and teacher training. But this year, the transition hit a wall: state agencies found themselves locked out of the Labor Department’s grant system, which failed to recognize their bank accounts. Richard Kincaid, an assistant state superintendent in Maryland, described a frustrating, endless cycle of re-verifying account numbers. Maryland had to front $22 million from its own coffers while waiting for federal reimbursements.

For many, this technical “glitch” feels like an ominous warning. Career and technical education (CTE) funding is just the tip of the iceberg; Title I grants—which provide $18 billion annually for schools serving 26 million low-income students—are next on the chopping block. An internal Education Department memo, obtained by Government Executive, called the CTE shift “miniscule” compared to the challenges ahead, noting that larger formula and competitive grants will be much harder to migrate.

State officials in some places, like California, Michigan, and Wyoming, reported smoother experiences accessing their funds. But others, such as Rhode Island, continued to encounter error messages and delays, underlining the chaos sudden federal changes can cause. “Operationally, it is a muddle,” said Braden Goetz, a former career education official now at New America.

Mission Mismatch and Lost Relationships

Beneath the technical problems lies a deeper concern: a mismatch in mission and culture between the Education and Labor departments. The latter is oriented toward workforce development, focusing on job centers and employment programs for adults. Educators worry that transferring K-12 and CTE programs to Labor risks sending the wrong message about the purpose of schooling and may compromise the specialized support these programs need.

Richard Kincaid and other experts warn that this shift could return the field to outdated models, where students—especially those from low-income backgrounds or communities of color—were tracked into narrow vocational pathways with limited academic rigor. “We may intentionally or unintentionally recreate that old system,” Kincaid cautioned, “where low-income students and students of color were funneled into limited, low-mobility job paths.” This is precisely what modern CTE reforms sought to avoid.

Staffing has also taken a hit. The team supporting state CTE programs has shrunk from fifteen to about five, leaving many new state directors without the guidance they need to comply with federal regulations. Amy Loyd, former assistant secretary for CTE, noted that the new Labor Department structure lacks the expertise and direct communication channels that states relied on.

International Education: Study Abroad and Language Programs in Limbo

The dismantling hasn’t been limited to domestic education. The government announced that major international education programs—including Title VI and Fulbright-Hays—would be transferred to the State Department’s Bureau of Educational and Cultural Affairs (ECA). The stated goal is to better align foreign language and study abroad initiatives with national security and foreign policy priorities.

In theory, this integration promises streamlined management and increased efficiency. In practice, the move has raised urgent questions about funding, staffing, and statutory authority. Mark Overmann, executive director of The Alliance for International Exchange, pointed out that none of the twelve transferred programs received FY25 funding, and FY26 allocations remain uncertain. “If the funding doesn’t materialise, then there won’t be anything for ECA to administer,” Overmann told The PIE News.

This uncertainty comes at a turbulent time: earlier in the year, Congress slashed $100 million from nearly two dozen State Department cultural exchange programs, even after the money had been appropriated. Meanwhile, layoffs at the State Department have reduced ECA’s workforce by nearly a hundred employees, prompting questions about who will run the transferred programs—if they continue at all.

The list of international education programs affected is extensive, including the American Overseas Research Centres (AORC), Business and International Education (BIE), Foreign Language and Area Studies (FLAS) Fellowships, and multiple Fulbright-Hays fellowships and seminars. Stakeholders expressed relief that these programs were moved rather than cancelled outright, but the lack of clear funding and authorization remains a major concern.

Bureaucratic Reshuffling: The End of an Era?

Some observers argue that transferring programs is not enough; true dismantling would require eliminating all remaining functions of the Education Department. Neal McCluskey, director at the libertarian Cato Institute, wrote that “bureaucracy will remain, and the Constitution will continue to be violated” as long as any centralized control persists.

Within the department, the uncertainty has reached staff levels. Secretary McMahon attempted to lay off 132 of the 185 remaining elementary and secondary employees during a government shutdown, but a federal court blocked the move, and staff were reinstated temporarily. It remains unclear whether further layoffs are planned.

For district leaders, the new normal is one of unpredictability. Jeremy Vidito, chief financial officer for Detroit Public Schools, said, “I expect Labor will have a hard time managing Title I allocations for next year, but the administration is trying to do that. They want the system to fail so they can … shift funds to private schools or just give the money back to taxpayers.”

Proponents of the shift, like John Pallasch (former assistant labor secretary), argue that all education is ultimately job training, and integrating programs under Labor makes sense. But most educators and experts disagree, insisting that the unique needs of students—particularly those most vulnerable—require dedicated support and expertise.

What’s Next for American Education?

As the Department of Education nears its end, the country’s educational landscape is being reshaped in ways that are still unfolding. Schools, districts, and universities are adapting to new funding mechanisms, altered support structures, and shifting priorities. The fate of many programs remains uncertain, dependent on future budget negotiations and the willingness of other agencies to pick up the slack.

For students, teachers, and families, the consequences will be felt most acutely where support is needed most—low-income schools, international exchanges, and specialized education initiatives. The hope is that, amid the bureaucratic turbulence, the core mission of supporting all learners will not be lost.

Assessment: The dismantling of the Department of Education has exposed deep fissures in America’s educational infrastructure. Technical glitches and mission mismatches have created confusion and frustration at every level, while the future of vital programs hangs on uncertain budget decisions. Whether these changes will ultimately empower states and improve outcomes—or simply fracture support for the country’s most vulnerable students—remains an open question, but the risks are clear and immediate.