This act dismantles the Department of Education by transferring its key programs—including K-12 funding, student aid, and special education—to the Departments of Health and Human Services, the Treasury, Labor, and State, while establishing new, flexible block grants for states.
Mike Rounds
Senator
SD
The Returning Education to Our States Act fundamentally dismantles the Department of Education by transferring most of its core functions, including K-12 and higher education funding, to the Departments of Health and Human Services, the Treasury, and Labor. This bill replaces existing federal education structures with flexible block grants managed by these non-education agencies, giving states greater discretion over funding use. The legislation also mandates new federal oversight, data reporting, and auditing requirements for states receiving these block grants.
Federal Education Oversight Axed: Bill Abolishes DOE, Shifts Student Loans to Treasury in One Year
This legislation, the Returning Education to Our States Act, is a massive government overhaul with a simple goal: shut down the U.S. Department of Education (DOE). One year after this bill becomes law, the DOE ceases to exist, and its responsibilities are scattered across half a dozen other federal agencies, fundamentally changing how federal education funding and oversight work.
The Great Federal Education Shuffle
If you’ve ever filled out a FAFSA or paid a federal student loan, you’ve dealt with the DOE. Under this bill, all those functions—the entirety of Title IV of the Higher Education Act, which covers Pell Grants and federal loans—are moved to the Department of the Treasury (Sec. 201). Yes, the folks who handle taxes and the national debt will now be in charge of your student loans. This means the loan servicing and grant distribution systems that millions of students rely on will be undergoing a massive, rapid transfer, creating high risk for disruption to financial aid access during the transition.
It’s not just student aid moving. Every single program gets a new home: Special education (IDEA) and the McKinney-Vento programs for homeless students go to Health and Human Services (HHS) (Sec. 304, 312). Career and technical education (Perkins Act) and vocational rehabilitation move to the Department of Labor (Sec. 302, 305). Even the Fulbright-Hays cultural exchange program is shifting to the Department of State (Sec. 313).
Block Grants and the New Funding Model
For K-12 education, the bill replaces existing funding streams with new block grants, which will be administered by HHS (Sec. 102). States will receive money based on what they previously got under Title I, plus a new population-based formula. The key difference? States gain almost total flexibility on how to spend this money on early childhood, elementary, secondary, and career/technical education. This flexibility is a double-edged sword: while states can tailor programs to local needs, it removes the federal guardrails and specific requirements attached to programs like Title I, potentially leading to funds being diverted away from the neediest students. A state could, for example, use money previously earmarked for low-income schools to fund a new statewide testing initiative instead.
Similarly, postsecondary education gets a block grant program managed by the Treasury Department, allocated based on the state’s college enrollment numbers (Sec. 203). To receive either block grant, states must agree to annual audits and comply with federal civil rights laws—but the power is clearly shifted to the states to decide how to use the funds.
What Happens to Civil Rights Enforcement?
Perhaps the most significant shift for students and parents is the change in civil rights enforcement. The DOE’s Office for Civil Rights (OCR) is dissolved. Oversight for crucial protections—like Title IX (sex-based discrimination), Title VI (race/national origin discrimination), and Section 504 of the Rehabilitation Act (disability rights)—is transferred to the Department of Justice (DOJ) (Sec. 4).
This means that if a parent believes their child with a disability is being denied required accommodations, or if a student faces discrimination at school, their complaint now goes to the DOJ, not a specialized education office. The concern here is that the DOJ, with its massive mandate covering everything from organized crime to national security, may not have the resources or specialized focus to handle the sheer volume and complexity of education-related civil rights complaints that the DOE’s OCR currently manages.
The Fine Print on Privacy and Oversight
One thing that is explicitly preserved is the Family Educational Rights and Privacy Act (FERPA), the rule that protects student records (Sec. 3). However, nearly all the rest of the General Education Provisions Act (GEPA), which provides broad administrative rules for federal education programs, is repealed. This move strips away many of the procedural safeguards and rules that govern how federal education money is managed, leaving a lot of administrative gaps to be filled by the new receiving agencies.
Finally, the entire process is kicked off by the President, who must submit a detailed reorganization plan to Congress within 120 days of the bill’s enactment (Sec. 402). This plan dictates the complicated logistics of moving staff, assets, and debts, giving the Executive Branch significant control over the final structure of federal education oversight.