How Will the Government Shutdown Affect Federal Student Aid?

Government Shutdown Impacts Federal Student AidEffective October 1, 2013, the U.S. Federal Government has partially shut down and 800,000 government employees will be furloughed until a new stopgap spending deal is reached and agreed upon by both the Democrats and Republicans. Colleges rely on federal funds to pay staff members who run programs for disadvantaged students seeking to enter and stay in college.

What Does This Mean for Students and Federal Student Aid?

The predicted short-term impact on federal student aid is said to be minimal. However, the U.S. Department of Education (DOE) is warning that a delay of more than a week could "severely curtail" funding to colleges and schools. The DOE is operating under a plan which calls for 94 percent of its employees to be furloughed during a government shutdown.  The contingency plan says:

A protracted delay in Department obligations and payments beyond one week would severely curtail the cash flow to school districts, colleges and universities, and vocational rehabilitation agencies that depend on the Department’s funds to support their services.  For example, many school districts receive more than 20 percent of their funds from Department-funded programs.

The Washington Post reports that over 14 million students receive student aid, in the form of grants and loans, at over 6,600 schools through Pell Grants and Direct Student Loans, and if a shutdown is prolonged, the payment of this money could be delayed because there won’t be enough people to process the payments.  

Those furloughs could make it difficult for grant or loan recipients to get answers to questions, as only 138 employees working on Pell Grants or the Direct Loan program would be allowed to continue work during a shutdown.

The Chronicle of Higher Education reports that the furlough of Education Department staff members involved in making grants could also lead to delays in the awarding of grants to colleges later in the year.

If the closure drags on for a week or more, up to 6 percent of the agency's 4,225 employees will be called back to perform "essential" functions, such as providing payments to grantees and administering student aid.

Additional Information

Information on federal student aid during a shutdown can be found here.

Sources: Fastweb.com, Studentaid.ed.gov, WashingtonPost.com, USAToday.com, Chronicle.com

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About the Author: Mackenzie Maher

Mackenzie Maher, Editor and Online Content Manager, graduated in 2010 from the University of California at Santa Barbara with a BA in Global Studies and a minor in Professional Writing, with an editing emphasis. Mackenzie’s diverse portfolio also includes writing, editing, photography, and documentary script writing on such subjects as travel, career, and finance. Next to writing, she is most passionate about world travel (she has visited 24 countries).

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