How the Shutdown Impacts Student Loans and FAFSA
Impact of Government Shutdown on the U.S. Education Department
The U.S. Department of Education is facing increased disruptions due to the ongoing government shutdown, which is affecting its core functions. Despite some operations continuing—such as the disbursement of federal financial aid and student loan payments—the department will halt investigation of civil rights complaints and will not issue new federal grants. Around 87% of its staff are expected to be furloughed.
Federal Student Loans
The department manages a portfolio of approximately $1.6 trillion in federal student loans, assisting about 9.9 million students across 5,400 institutions. Student aid like Pell Grants and loans will still be provided, and borrowers are required to continue making payments. The department plans to furlough most of the remaining staff in the Office of Federal Student Aid but will proceed with processing applications such as FAFSA and meet deadlines related to recent legislation, including rules around upcoming student loan payments.
Most interactions related to student loans are handled through loan servicers rather than directly with department staff.
Funding for Schools
While elementary and secondary education primarily rely on state and local funding, the Department of Education distributes billions of dollars in federal aid to schools. During a shutdown, new grants will not be issued, nor will the department play a regulatory or advisory role. However, since much aid awarded earlier in the year is already allocated, minimal disruption to school districts is anticipated. Programs like Title I and IDEA funding will continue, but aid programs dependent on timely federal disbursements, such as Impact Aid, might face delays.
Civil Rights Investigations
The department will suspend investigations into civil rights violations in educational institutions during the shutdown. The civil rights office, already operating with reduced staff since layoffs earlier this year, will halt case work and backlog resolution. This raises concerns about addressing complaints related to discrimination based on race, sex, or disability, which may worsen due to the reduced capacity.
