A new internal report warns the U.S. Department of Education has lost substantial capacity to serve students across K-12 and higher education after staffing cuts in early 2025. The report cites a loss of 40% of staff within the first months of the year and describes the elimination of suboffices required by law to carry out key functions, including parts of financial aid oversight, civil rights complaints handling, English learner work, and cybersecurity. The Office of the Inspector General review says that 90 grants worth $504 million were terminated and that another 223 grants were flagged for cancellation, while 129 contracts valued at $1.3 billion were halted. The department allegedly limited inspectors’ access to staff information, constraining the review of the full impact. The report also describes operational redistribution: civil rights enforcement moving toward the Department of Justice, and special education support shifting to Health and Human Services. New interagency partnerships—14 within about a year—reflect a broader strategy of shrinking the department’s direct role. Higher education leaders will watch how these shifts play out for enforcement, compliance support, grant administration, and protections tied to civil rights and student data security.