By Anita Hamilton

President Donald Trump signed an executive order late Thursday afternoon aimed at further dismantling the Education Department.

"We're going to shut it down as quickly as possible," he said at an event in the White House's East Room. "We're going to be returning education very simply back to the states."

The department's "useful functions," such as overseeing Pell grants for undergraduate students demonstrating financial need, Title I funding for schools serving students from low-income families, and resources for those with special needs will be retained.

The order directs Education Secretary Linda McMahon to "take all necessary steps to facilitate the closure of the Department of Education and return authority over education to the States and local communities while ensuring the effective and uninterrupted delivery of services, programs, and benefits on which Americans rely."

It also stipulates that any program receiving federal funds "terminate illegal discrimination obscured under the label 'diversity, equity, and inclusion' or similar terms and programs promoting gender ideology."

The department isn't being eliminated completely, however, as that would require an act of Congress. Instead the administration will keep chipping away at the agency. While no specific cuts were listed on the order, it notes that the department's 80-person public relations department cost more than $10 million a year. Last week, the department announced that it was cutting its staff by nearly 50%.

It will continue all statutorily mandated functions, including "formula funding, student loans, Pell Grants, funding for special needs students, and competitive grantmaking," McMahon said as part of the downsizing announcement. Other functions are likely to be turned over to states or eliminated. In a SiriusXM interview earlier this week, McMahon said the department's role is "to help provide funding so that the states themselves can help with their own programs," adding that the creativity and innovation has to come from the states.

Moves to curtail the department's reach are already getting pushback. A group of 21 attorneys general sued last week to block the department's planned job cuts, arguing that the move is "equivalent to incapacitating key, statutorily-mandated functions of the Department."

"See you in court," said Randi Weingarten, president of the American Federation of Teachers Union, in response to news of the new executive order. The union represents 1.8 million teachers and staff across the country.

A federal judge in Maryland district court ordered the department to reinstate probationary workers because their terminations weren't for performance, but instead were illegally conducted reductions in force. The administration is appealing the ruling.

The department oversees some $1.6 trillion in federally-guaranteed student loans held by millions of Americans. Scaling back its operations could help the for-profit education industry if it leads to less federal oversight.

Shares of the for-profit firm Adtalem Global Education, which owns former DeVry schools, fell slightly Thursday, but have doubled over the past year. The stock price of Grand Canyon Education, another for-profit operator, was basically flat, but is up 28% over the last 12 months.

Write to Anita Hamilton at anita.hamilton@barrons.com

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March 20, 2025 18:03 ET (22:03 GMT)

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