Déjà Vu All Over Again: Looming Government Shutdown Not Likely to Significantly Disrupt Student Aid

By Stephen Payne, Policy & Federal Relations Staff

"It's like déjà vu all over again."

The famous quote attributed to the late baseball player Yogi Berra, who passed away on Tuesday, fits perfectly in most political debates in Washington, D.C. Perhaps no major issue feels so persistent as the annual congressional scramble to avoid a government shutdown.

While congressional leaders in both parties hope to avoid a shutdown, anything is possible with only days until October 1, the beginning of the federal fiscal year and the deadline for Congress to approve a budget and have it signed by the President. The first efforts to avert a shutdown appeared on Tuesday when Sen. Thad Cochran (R-MS) released a continuing resolution (CR) to fund the government through December 11. If the bill is not successfully signed into law, the government will shut down.

While a government 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 2015-16 are already in place.

According to a 2011 Dear Colleague Letter published by the Department of Education, “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 our federal offices would be closed during a federal government closure, the majority of our Title IV processors, call centers, and Web sites will remain operational.” Though 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 2013 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 14 million students receive student aid, in the form of grants and loans, at over 6,600 schools through these programs. As a result of the permanent and multi-year appropriations, Pell Grants and student loans could continue as normal. Staff and contractors associated with these areas will continue to work.” In addition, depending on the length of a shutdown, the Department has the authority to allow certain employees to return to their post if “significant damage” would result from their absence.

Of all of the Department of Education’s programs, Federal Student Aid (FSA) appears to be least affected by a potential shutdown. In 2013, 212 Department of Education employees were exempted from the shutdown, 138 of whom were FSA employees.

As always, NASFAA will continue to monitor this situation and provide updates as necessary in Today’s News.


Publication Date: 9/24/2015

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