Potential Implications of Eliminating the Department of Education
In our ongoing review of Project 2025’s potential effects on corporate governance, finance, and human capital, we delve into the proposed abolition of the Department of Education (DOE). This initiative, presented as a strategy to revert educational control to states, may have profound impacts on both current and future employers and the workforce. Businesses must understand these potential changes to adapt to a shifting labor market landscape.
The Heritage Foundation’s Project 2025 suggests dismantling the DOE, advocating for state-controlled education devoid of federal intervention. However, the National Education Association (NEA) warns it would devastate public education. Key proposals of Project 2025 include:
- Terminating Federal Student Aid Programs: The removal of Pell Grants, federal student loans, and loan forgiveness would place the financial responsibility of higher education on individuals and private entities.
- Advocating for Privatization and School Choice: The plan supports voucher systems and charter schools, potentially reducing public K-12 education funding and increasing educational quality disparities across states.
- Ending Federal Workforce Training Grants: The cessation of funding for vocational education and adult retraining would shift the onus of skill gap management to businesses.
- Defunding Diversity and Inclusion Programs: The proposal seeks to abolish diversity, equity, and inclusion (DEI) initiatives in education, potentially affecting the talent pipeline for companies aiming to sustain diverse and innovative workforces.
According to the Century Foundation, terminating the DOE would negatively impact a wide array of individuals and entities.
- Impact on College Students: The removal of federal financial aid would disproportionately affect students from lower-income backgrounds across racial and gender lines. This includes white men, who constitute a substantial portion of student loan and Pell Grant recipients. The absence of these financial supports may hinder access to higher education, thereby reducing the talent pool across industries.
- Challenges for Businesses Requiring Skilled Workers: Without federal educational support, companies may struggle to find workers with essential skills, particularly in STEM, healthcare, and finance sectors.
- Effects on Unemployed and Low-Income Individuals: The loss of workforce retraining programs will limit opportunities for job seekers to acquire new skills, exacerbating employment challenges and economic disparities.
- Consequences for Public Schools and Teachers: Federal funds crucial for special education, rural schools, and low-income districts may lead to teacher layoffs, larger class sizes, and fewer resources if eliminated.
- Hurdles for Rural and Underserved Areas: Many small towns and economically disadvantaged regions depend on federal education support for broadband, transportation, and teacher recruitment, which will be jeopardized by the loss of DOE funding.
Strategies for Human Capital Management in a Changing Landscape
Human Capital Practitioners must adjust recruitment and retention strategies in response to a diminishing and less prepared talent pool. With the potential loss of federal workforce training and student financial aid, companies might experience a shortage of qualified candidates for specialized roles. To counter these challenges, practitioners should:
- Increase Investment in Training and Upskilling: Companies need to bolster workforce development programs, including apprenticeships, on-the-job training, and tuition reimbursement initiatives.
- Forge Partnerships with Educational Institutions: Collaborating with local community colleges, trade schools, and private entities can help bridge skills gaps through tailored training programs.
- Enhance Employee Value Propositions: With fewer college-educated candidates, HR leaders should refine benefits, career progression opportunities, and other incentives to retain top talent in a competitive market.
Financial Pressures and Corporate Governance Challenges
The removal of the DOE would increase financial burdens on businesses and employees alike. Without federal backing, the expense of educating and training the workforce would shift to private employers, raising the cost of maintaining competitiveness. Companies must:
- Plan for Elevated Training Budgets: As companies assume responsibilities previously managed by federal education programs, workforce development costs will rise.
- Evaluate Long-Term Labor Cost Impacts: With intensifying skills shortages, businesses may need to offer higher wages or signing bonuses to attract and retain qualified talent.
- Adapt Compensation Strategies: Organizations should explore flexible compensation structures, such as performance-based incentives and non-traditional benefits, to alleviate financial pressures on employees facing rising education costs.
Corporate Governance Considerations – Mitigating Workforce Risks
For board members and corporate governance leaders, the DOE’s elimination presents new compliance and operational risks requiring proactive management. Companies must:
- Integrate Workforce Readiness into Risk Management: Workforce shortages and skill gaps should be included in risk assessments, with strategies to address potential labor shortages.
- Ensure Compliance with Evolving Labor Laws: Changing education policies may introduce new state-level compliance challenges, necessitating vigilant legal oversight.
- Enhance ESG and Social Responsibility Strategies: With expected educational disparities, companies committed to ESG principles should consider active participation in education initiatives, such as scholarships and school partnerships.
Project 2025’s proposal to eliminate the Department of Education would fundamentally alter the nexus between education and the workforce, transferring workforce development responsibilities from government to private industry. HR leaders, financial professionals, executive teams, and board directors must address widening skills gaps, anticipate rising training costs, and navigate a more fragmented labor environment.
The proponents of Project 2025 argue that decentralizing education will enhance efficiency, but for businesses, the lack of federal oversight and funding will introduce new risks and costs that cannot be ignored. The critical question is not whether companies should prepare for this potential scenario, but how quickly they must act to protect their workforce and ensure long-term viability.
For further analysis of Project 2025’s implications, refer to previous columns on this topic at forbes.com.
