Although a shutdown is certainly not ideal for the vast amount of programs within the federal government, federal student aid programs should avoid major consequences from a short-term shutdown. Federal student aid programs are forward-funded, meaning most of the dollars for award year 2017-18 are already in place. Furthermore, the Direct Loan program and a portion of the Pell Grant program operate as “mandatory” programs, meaning they operate regardless of year-to-year appropriations.
According to a 2011 Dear Colleague Letter published by the Department of Education (ED), “In the event of a closure of the federal government (more commonly referred to as a shutdown or furlough), there will be minimal impact on schools, lenders and guaranty agencies and their ability to administer the Title IV Programs. While ED’s federal offices would be closed during a federal government closure, the majority of Title IV processors, call centers, and Web sites will remain operational.” While this guidance may be from 2011, a similar process would be expected this year if the government were to end up shutting down.
The Department of Education’s FY 2018 Contingency Plan specifically addresses the Federal Student Aid programs. “Program funds for Pell Grants and Direct Student Loans are provided through mandatory and carryover appropriations. Over 13 million students receive student aid, in the form of grants and loans, at more than 6,200 schools through these programs. As a result of the permanent and multi-year appropriations, Pell Grants and student loans could continue as normal for some time. Staff and contractors associated with these areas will continue to work.” In addition, depending on the length of a shutdown, ED has the authority to allow certain employees to return to their post if “significant damage” would result from their absence.
Of all of ED’s programs, Federal Student Aid (FSA) appears to be least affected by a potential shutdown. 248 ED employees would be exempted from the shutdown, 158 of whom are FSA employees.
** Update: FSA on January 19 released updated guidance on the implications of a government shutdown on various processing and customer service operations.
Publication Date: 1/19/2018