Notwithstanding the RIF, there have not yet been any corresponding changes to the Higher Education Act, the Department’s implementing regulations or published guidance.
On March 11, 2025, as part of the Department of Education’s “final mission,” the Department announced a reduction in force (RIF) of nearly 50 percent of its workforce. Impacted Department staff will be placed on administrative leave beginning Friday, March 21. The RIF is reported to impact more than 1,300 employees, including significant reductions in areas such as the Department’s Office of General Counsel, Office for Civil Rights, various technology and records management divisions and vendor performance divisions.
Perhaps the most immediately impactful reductions on the operations of Title IV eligible colleges and universities could be those to the Federal Student Aid’s School Eligibility and Oversight Service Group (SEOSG), which is responsible for administering program eligibility, certification, financial analysis and oversight of schools participating in Title IV programs. It is this group that colleges and universities interface with regularly for a number of activities, initiatives and substantive changes reflecting the dynamic nature of institutions.
Prior to the RIF, SEOSG had eight School Participation Divisions (SPD). There were seven regional SPDs (Atlanta, Chicago/Denver, Dallas, Kansas City, New York/Boston, Philadelphia and San Francisco/Seattle), each having responsibility for specific domestic schools assigned to them. There also was a Multi-Regional and Foreign School Participation Division responsible for oversight of publicly traded companies owning participating schools and large school groups, as well as foreign schools that participate in Title IV programs. In addition to providing common services to its region, the Atlanta SPD included a Financial Analysis Division responsible for conducting financial analysis and reviews of the financial responsibility of schools, analysis of 90/10 reporting, fiscal reviews and forensic audits for all SEOSG divisions.
Our understanding from available information is that, as a result of the RIF, the Department has eliminated all regional SPDs except for the Chicago/Denver and Philadelphia SPDs, and has also eliminated the Multi-Regional and Foreign School Participating Division. Thus, the Chicago/Denver and Philadelphia SPDs will have oversight and service responsibility for over 5,800 Title IV eligible colleges and universities. It is unclear how the financial analysis services provided by the Atlanta SPD to all SEOSG divisions will be provided going forward. As of the date of this communication, the Department has not released publicly any information on the restructuring or work management plan.
The RIF will likely lead to delays in responses from the Department where required by statute or regulation, to slower responses to requests for technical assistance and guidance, and potential delays to eligibility and certification processing. Of particular concern would be processing requests for certification and recertification, which are currently backlogged, implementing changes of ownership, which often require guidance from the Department, addition of new locations and new programs when approvals are required, and navigating the E-App, which in its current form regularly requires assistance from the SPDs. Perhaps exacerbating these delays are the staff reductions in the Office of General Counsel, which often partners with the SPDs in addressing issues involving or raised by institutions.
Notwithstanding the RIF, there have not yet been any corresponding changes to the Higher Education Act, the Department’s implementing regulations or published guidance. This means there is no change to the need for institutional compliance. Institutions therefore must remain vigilant in their efforts to meet statutory and regulatory requirements and take care to document their activities in doing so. Potential avenues of enforcement for noncompliance, in addition to those of the Department, include whistleblowers (under the False Claims Act) and third-party actions (individuals, class actions, advocacy groups, etc.) for failure to comply with current laws. Institutions should also anticipate continued or increased enforcement actions from accreditors, state licensing agencies and state attorneys general depending on where your institution operates, especially from states that do not support the current administration’s initiatives regarding the Department.
What Institutions Need to Do Next
To brace for the impact, given the current environment, we recommend that institutions take the following proactive actions to avoid disruptions to their operations and ensure regulatory compliance:
Assess Current Status
Take an inventory of all required actions, activities, communications and inquiries your institution has open with the Department, including the staff member(s) with whom you are working. It is our understanding that staff departing due to the RIF will have limited ability to communicate prior to their separation date of Friday, March 21, which may be shortened should a government shutdown occur before then.
Document Compliance
Existing notice and approval requirements under law, regulation and guidance remain in place until changed. Do the best you can under the circumstances to comply with these requirements and document your efforts. If existing channels and contacts are no longer available, seek alternative methods and overcommunicate with the Department. In addition, ensure you have an accurate record of the information in the Department’s systems by printing a copy of your institutional ECAR and taking screenshots of any updates submitted to the E-App.
Planning
Determine what academic and institutional changes are planned for academic year 2025-2026 to be prepared for modifications to the Department’s review and approval process that would impact the implementation of those changes.
Communications Strategy
Strengthen crisis communication strategies to your stakeholders (students and prospective students, faculty, staff, trustees and other regulators in particular) to effectively manage potential regulatory or financial disruptions and anticipate any potential delays in financial aid processing.
Prioritize Compliance
Review your internal compliance and monitoring activities to support proactive identification of potential risks.
Compliance Review
Work closely with outside counsel and auditors to identify compliance risks that may result from any delays or disruptions to develop a response strategy.
Stay Informed
Keep up to date on information and updates and guidance provided by the Department (e.g., FSA Partner Connect Knowledge Center Updates), as well as industry associations (e.g., ACE, NAICU, NACUBO, NACUA or CECU) that provide updates about evolving federal policies and lobbying efforts.
Further Developments
On March 13, Democratic attorneys general in 20 states and Washington, D.C., filed a lawsuit against the Department, Secretary Linda McMahon and President Donald Trump challenging the president’s directive to shut down the Department, including the RIF. This is a rapidly developing situation. Duane Morris attorneys are closely monitoring updates, changes and pending litigation and are committed to providing information when it becomes available.
For More Information
If you have any questions about this Alert, please contact any of the attorneys in our Higher Education Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.