What makes you think that it could be achieved by a smaller entity? The grants go to thousands of municipalities all over the country and 10 million Pell Grant recipients. Also, the department oversees $150 billion in annual direct student loans to 13 million students every year. Figuring out who is eligible for grants, how much different programs should get, etc, is not a trivial task. Also, the Dept. of Ed.'s mandate is complicated by Title I and IDEA. The purpose of Title I is to combat racial discrimination in education among historically disadvantaged minorities, and the purpose of IDEA is to combat educational discrimination among the disabled. These are hairy and complicated problems to deal with (e.g. the Department is charged with dealing with the states, who look for every way possible to avoid providing services to minorities and the disabled).
The program management overhead of the Dept. of Ed. is about $1.8 billion: http://www2.ed.gov/about/overview/budget/budget12/summary/ed.... Out of that $1.8 billion, $1 billion goes to administering student loans and Pell Grants. Assuming that it costs about the same to administer a student loan versus a Pell Grant, we can estimate that maybe $450 million is spent administering Pell Grants. That reduces the overhead, excluding student loans (which aren't included in the $65 billion discretionary budget) to $1.25 billion, or 1.9%.
The program management overhead of the Dept. of Ed. is about $1.8 billion: http://www2.ed.gov/about/overview/budget/budget12/summary/ed.... Out of that $1.8 billion, $1 billion goes to administering student loans and Pell Grants. Assuming that it costs about the same to administer a student loan versus a Pell Grant, we can estimate that maybe $450 million is spent administering Pell Grants. That reduces the overhead, excluding student loans (which aren't included in the $65 billion discretionary budget) to $1.25 billion, or 1.9%.