Trump’s Education Department Restructuring Faces Cost Questions and Grant Disruptions

The Trump administration’s effort to dismantle the U.S. Department of Education is facing questions over its costs and its effect on federal education aid. A move out of the department’s Washington headquarters has prompted a proposed $215 million renovation for another agency, while attempts to shift major grant payments to a different federal system have twice been halted. Education Secretary Linda McMahon has described the restructuring as a victory against federal “red tape.”

The department says moving hundreds of employees from the historic Lyndon Baines Johnson (LBJ) building to a smaller facility a block south will save taxpayers roughly $4.8 million a year. The administration plans to put Department of Energy staff in the LBJ building, a move it says would save $350 million in deferred maintenance on Energy’s outdated facilities. But the building cannot accommodate Energy’s highly sensitive, high-security operations without a comprehensive overhaul. House Republicans on the committee overseeing federal buildings have moved to allocate $215 million for that work.

At the same time, the Education Department is moving funding streams from its unified internal grant system to payment platforms run by other federal agencies, including the Department of Labor (DOL) and the Department of Health and Human Services (HHS). Two attempts to route Title I and other major education grants through Labor’s system were halted after state education officials warned of widespread technical errors, inadequate staff training and possible delays in school funding.

Title I provides $18.4 billion annually to low-income school districts nationwide under the Elementary and Secondary Education Act (ESEA). The department returned to its legacy education system to secure the October 1 disbursement, but internal sources say the administration intends to move the payments back to Labor’s system next year.

The headquarters move also reverses a consolidation project launched during the first Trump administration in 2019. Projected to cost $37 million, the LBJ renovation has cost taxpayers approximately $49 million since 2021. It was intended to bring scattered Education Department staff into one headquarters to improve efficiency and collaboration between agencies.

Rachel Gittleman, president of AFGE Local 252, which represents Energy Department workers, called the physical upheaval a massive waste of public funds. She said some relocated Education Department employees have been assigned up to three desks: one at the old headquarters, one at the smaller new headquarters and others at outside agencies where they have been detailed.

A separate move of career and technical education grants worth more than $1.93 billion to Labor’s payment system last year left several states waiting months for their funding. Education Department press secretary Savannah Newhouse disputed claims of structural inefficiency, pointing to more than 7,200 payments successfully processed through the Labor system since October 2025.

Bryce McKibben, a higher education policy analyst at Temple University who works with state agencies and collegiate institutions, said changing portals and declining federal guidance have left grant recipients struggling. McKibben suggested the complexity may be intended to discourage local and state entities from seeking federal assistance.

Formally abolishing a Cabinet-level department requires an act of Congress, a legislative hurdle the administration cannot easily clear. Instead, officials have used Interagency Agreements (IAAs), ordinarily routine arrangements authorized under the federal Economy Act for agencies to share specific resources, services or expertise. Lawmakers have sharply criticized what they call the unprecedented scale of their use to move entire divisions.

Since early September, more than one hundred employees from the Office of Special Education and Rehabilitative Services (OSERS) have been ordered to report to an HHS facility, while dozens from the Office for Civil Rights (OCR) have been transferred to the Department of Justice (DOJ). They work at the host agencies in renewable 120-day assignments but remain Education Department employees performing the same core duties, raising questions about the purpose of relocating them.

Senate Democrats led by Senator Patty Murray of Washington have formally asked the Government Accountability Office (GAO) to evaluate the agreements’ total taxpayer costs and operational effects. The nonpartisan watchdog is preparing its latest investigation as the restructuring remains the subject of legislative debate on Capitol Hill.

Congress directed the department in January to give biweekly briefings on the agreements, including cost reports and assessments of how transfers would affect federal grant oversight. Congressional aides say officials repeatedly declined to provide cost figures. The department ended the briefings in June after Representative Suzanne Bonamici, an Oregon Democrat, introduced a resolution to impeach McMahon. Newhouse said the department has continued to give committee members significant updates; congressional staffers say they have lost access to vital financial information.

An earlier GAO report found that the Education Department spent up to $38 million in taxpayer funds between March and December 2025 paying laid-off employees not to work. During the same period, the Office for Civil Rights resolved more than 7,000 discrimination complaints, approximately 90% of them by outright dismissal rather than substantive investigation.