The Education Authority (EA) said the department had instructed them to cut the amount spent on school uniform grants by £3m.
That would mean £1.9m is available in 2017/18, compared to £4.9m in 2016/17.
The department said that it faced "major financial pressures in 2017-18 if it is to operate within its budget".
"Consequently options to reduce spending across all programme areas are being explored, including the clothing allowance (uniform grants), extended schools and the entitlement framework," it said.
About 98,000 pupils in Northern Ireland received a grant this year.
The most that any individual pupil can receive is £78 which helps pay for uniform and PE kit for post-primary pupils.
The instruction by the department to make the proposed cut was discussed at the most recent board meeting of the EA.
An EA spokesperson told the BBC: "In its recent Resource Budget Allocation letter, the Department of Education has instructed the Education Authority to make certain spending cuts to achieve budget savings.
"These include a reduction of £3m for school uniform grants."
The BBC understands that, if implemented, the reduction in funding of about 60% would not reduce the number of applicants, but would reduce the amount of support each would receive.
The school clothing allowance scheme helps pupils from low income families in primary, post-primary and special schools. Primary school pupils can receive £35.75 towards uniform costs.
Post-primary and special school pupils can receive £51 towards their uniform if they are under 15 years old and £56 if they are over 15.
Post-primary and special school pupils can also receive £22 towards paying for school PE kit.
However, if the cut were implemented, each pupil would receive a reduced amount towards their school uniform.
The department also confirmed that extended schools funding is being reduced by about £1.5m.
Just over £10.6m was provided to around 400 schools in 2016-17 and this is being cut to £9.1m in 2017/18.
The extended schools scheme gives schools in relatively disadvantaged areas some extra money.
They use this to provide breakfast and homework clubs, summer schemes and parenting support.
Money given to low income families to help pay for school uniforms could be cut substantially by the Department of Education to save money.