9/30 UPDATE: Shutdown Averted (for now)
On Saturday 9/30, the house voted on H.R. 5860, a resolution that will continue to fund the government for the next 45 days. The bill was signed by President Biden before the midnight deadline. A shutdown has been averted for now and the government will continue running at least until mid November, when the resolution expires.
In light of the potential government shutdown due to the failure to pass the budget for the next fiscal year (October 1 – September 30), the Department of Education could face significant disruptions. The looming shutdown coincides with a busy season for the Education Department, affecting various aspects of its operations.
Student Loan Payments and Negotiations
Student loan payments are scheduled to resume shortly after the potential shutdown begins. The agency also plans to start negotiations over a new plan for student loan forgiveness in a few weeks. However, these plans could be affected depending on the duration of the shutdown. While student loan payments will restart regardless of a government shutdown, other essential tasks could be impacted.
Final Rules and FAFSA Update
The Education Department is in the process of issuing final rules on Title IX and gainful employment. Additionally, a new version of the Free Application for Federal Student Aid (FAFSA) is set to launch in December. An October shutdown could disrupt these processes and potentially delay the implementation of new rules and the FAFSA update.
Contingency Planning
To mitigate the potential disruption, the department is planning to designate certain employees as critical to ensure that work on overhauling the FAFSA continues as planned. The new FAFSA, originally scheduled for an October 1 debut, has already been delayed but is expected before the end of the year.
Impact on Borrowers
Consumer protection advocates are concerned about how a shutdown could affect borrowers who are set to make payments next month for the first time in more than three years due to a pandemic pause. A shutdown could create chaos and difficulties for borrowers, particularly if it leads to disruptions in loan servicing.
Longer-Term Implications
The length of the shutdown could also have longer-term implications. If it extends beyond a few weeks, it could substantially disrupt the return-to-repayment effort and long-term servicing support for borrowers. It may also impact legislative and planning activities for the coming year.
The Way Forward
While the specifics of the shutdown contingency plan haven’t been released, higher education industry groups and experts hope that essential work related to financial aid and student loans will continue, even in the event of a shutdown. However, the potential impacts of a prolonged shutdown are a cause for concern.
It is crucial for administrators and offices to plan for potential delays and slowdowns during this time. The more proactive institutions can be in terms of planning for disbursements and reporting, the better prepared they will be to navigate these challenges.