According to the Education Department, several key functions will remain operational during US government shutdown that took place on Wednesday after no funding deal reached between Trump and Democrats. Federal financial aid will continue to be distributed, and student loan payments will still need to be made, according to AP.
A key responsibility of the department is overseeing the $1.6 trillion federal student loan portfolio. According to its shutdown contingency plan, student aid will mostly remain unaffected in the short term. Pell Grants and federal student loans will still be distributed, and borrowers are still required to make their loan payments.
Roughly 9.9 million students receive federal financial aid across around 5,400 colleges, the department states. During the shutdown, 632 out of 747 employees in the Office of Federal Student Aid are expected to be furloughed, though the department did not specify which staff members. Most borrowers deal with loan servicers contracted by the department, rather than directly interacting with FSA staff.
The department will also keep processing the Free Application for Federal Student Aid (FAFSA), which plays a crucial role in how colleges and universities determine financial aid for new students. Additionally, some staff working on student loan policy changes, part of the Republican-backed “One Big Beautiful Bill”, will remain on duty to meet legally mandated deadlines.
According to Persis Yu, Deputy Executive Director and Managing Counsel at the Student Borrower Protection Center, the longer Washington takes to reach an agreement, the more issues are likely to emerge, USA Today reported.
‘Borrowers need service right now more than ever’
“This moment is actually really important in the student loan cycle because we are on the cusp of millions of borrowers defaulting on their student loans. Borrowers need service right now more than ever,” Yu stated.
As per the report, Betsy Mayotte, President and Founder of The Institute of Student Loan Advisors, said that during a brief shutdown, borrowers should still be able to contact their loan servicers and vendors with any questions, adding, “The only time it becomes questionable is if the shutdown were to last a very long time — weeks or months.”
“Remember that most of the functionality is done by outside vendors, and they will continue at least for the foreseeable future,” Mayotte said. “If, for some reason, the shutdown goes on for a very long time, then start paying attention to the studentaid.gov website to see if anything changes,” Mayotte further said.
