Impact of a Government Shutdown on Student Financial Aid - Fastweb

Impact of a Government Shutdown on Student Financial Aid

Mark Kantrowitz

April 08, 2011

Impact of a Government Shutdown on Student Financial Aid

If Congress fails to pass legislation funding the federal government, the federal government will shut down and more than 800,000 government employees will be furloughed. The impact on federal student aid, however, will be minimal.

During a government shutdown government employees who are considered “essential” will continue to work. This includes personnel who are critical for national security and the safety of life and property. The US Armed Forces will continue to operate, along with federal law enforcement. Most other federal agencies will be operating with a skeleton crew of essential staff.

Programs that have already been funded, either through mandatory funding or prepaid contracts, or which depend on an external source of funding (e.g., the US Postal Service), will continue to operate. For example, student loan servicers will continue to operate because they are paid through contracts that were funded last year. But it’s unclear whether other programs could continue to operate if the staff who manage them are not considered essential. Even when staff continue to work, they may not receive paychecks until the shutdown is over.

Most federal student aid programs will continue to operate during a shutdown. Mainly peripheral functions will be suspended. The issuing of policy guidance and processing of paperwork will be suspended, but automatic and online processing will continue. Various oversight functions, such as program reviews and audits, will be suspended. Training workshops will also need to be rescheduled. New regulations, such as the publication of the final rule for the US Department of Education’s gainful employment regulations, will be delayed.

Legislative aides will lose their student loan repayment benefits for the duration of the shutdown.

The legislation passed earlier this year to temporarily avert a shutdown terminated funding for LEAP and the Thurgood Marshall Legal Educational Opportunity programs. That will not change during a government shutdown.

If the government shutdown continues until July 1, 2011, it may affect funding for student financial aid for the 2011-12 award year. The government shutdown is unlikely to last that long, however, because the previous government shutdown in 1995-96 lasted only three weeks.

Impact on Federal Student Aid Call Centers

Most federal student aid call centers will continue to operate.

The Federal Student Aid Information Center will continue to answer calls from students and their families to 1-800-4-FED-AID (1-800-433-3243).

The Direct Loan Consolidation Center will continue to answer borrower calls to 1-800-557-7392. The various federal student loan servicers will continue to answer borrower calls, including ACS (1-800-508-1378), Direct Loan Servicing Center (1-800-848-0979), PHEAA (1-800-699-2908), Great Lakes (1-800-236-4300), Nelnet (1-888-486-4722) and Sallie Mae (1-800-722-1300). The Default Resolution Group will continue to answer borrower calls to 1-800-621-3115. The Total and Permanent Disability processing centers will continue to answer borrower calls, including the Nelnet Total and Permanent Disability Service at 1-888-303-7818 and the Veterans Disability Discharge Unit at 1-404-974-9490.

The Federal Student Aid Ombudsman will continue to answer calls to 1-877-557-2575.

Impact on Federal Student Aid Web Sites

The and web sites, as well as FAFSA4caster, will continue to operate. Student Aid Reports (SAR) and Institutional Student Information Records (ISIR) will continue to be issued. Automated data matches, such as with the Social Security, immigration and Selective Service systems, will continue, but manual resolution of data mismatches may be delayed.

Colleges will continue to be able to make awards and disburse funds to students using their 2010-2011 campus-based aid allocations.

The and web sites will continue to operate. The Direct Loan program will continue to process promissory notes and colleges will continue to be able to draw down and disburse student loan funds. The Direct Loan program will continue to service and collect payments on federal education loans. The servicer of total and permanent disability discharges will continue to process assignments and referrals. Students will continue to be able to consolidate their federal students loans. The National Student Loan Data System (NSLDS), including the student access portal, will continue to operate.

Note that scheduled system maintenance on the Central Processing System (CPS) will continue as planned even in the event of a government shutdown. This will affect several of the federal student aid web sites from 5 am ET to 7 pm ET on Sunday, April 17, 2011. The affected web sites include, and the FAFSA4caster web site.

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