NASFAA Mention: Yes, You Still Need to Pay Your Student Loans During the Shutdown — But You Could Hit Some Snags

"Despite the partial government shutdown, it should (mostly) be business as usual for students relying on federal student loans to afford college and borrowers repaying them," MarketWatch reports.

"The Department of Education remains fully funded, which means its contractors are still collecting student loan payments and the agency is still dispersing grants and federal student loans. Still, students, borrowers and schools may experience some hiccups for tasks that require information from another agency experiencing greater impacts from the shutdown, like the IRS.

'It’s the other departments that are running into some issues,' said Mark Kantrowitz, the publisher of Cappex.com and a financial aid expert.

Here’s what you need to know:

Borrowers repaying their student loans

Perhaps the most important thing that borrowers who are repaying their student loans should know is that the shutdown doesn’t affect their student loan bills.

Borrowers 'should be operating as if everything is normal and there is no disruption at all,' said Justin Draeger, the president of the National Association of Financial Aid Administrators, a professional association for financial aid officers. In other words: 'Don’t stop paying your loans,' he says.

Still, the shutdown could impact some borrowers trying to manage their debt. Borrowers who want to take advantage of the government’s income-driven repayment plans, which allow them to pay off their debt as a percentage of their income, need to show proof of income to their student loan servicer. They also need to recertify their income every year to stay on the plans.

... Students applying for and receiving aid

The lack of availability of tax transcripts is also causing a snag for some students applying for aid, experts say. Roughly 30% of students who fill out the Free Application for Federal Student Aid, or FAFSA, are flagged for verification each year, a process that requires them to prove their income. Typically these students use a tax transcript to verify their income.

... Again, the agencies say this delay isn’t related to the government shutdown, but is the result of scheduled maintenance.

Students who find themselves in this situation should contact the schools they’re working with to find out what they need to submit and when they need to submit it, Draeger said. In some cases, colleges are working with students to allow them to start the semester in the absence of financing until the issues are resolved, Baime said.

Questions on the FAFSA that require interactions with other agencies are also causing hiccups for some students and schools. In order to qualify for federal financial aid, male students need to register for the draft. The FAFSA typically performs a database match with the Selective Service Administration to make sure required students have registered, but right now that match is failing, Draeger said. Colleges are able to look students up individually to make sure they’re registered, he said.

Despite these challenges, for the most part, students shouldn’t see any effect on their financial aid during the shutdown, Draeger said.

'The Department [of Education] is funded, federal student aid dollars are flowing,' he said."

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 1/9/2019

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