Will a government shutdown impact your student loans and federal financial aid?
Since President Donald Trump took office this year, he has made the dismantling of the U.S. Department of Education a priority — a scenario that will only continue under the government shutdown that started Wednesday.
Under a government shutdown, certain operations such as federal financial aid, like Pell Grants, and student loan payments will continue, according to a contingency plan from the department.
However, any new grants will stop flowing and civil rights investigations will end. Eighty-seven percent of its workforce will be furloughed.
While a government shutdown usually furloughs employees until they can be brought in later, the shutdown could also create a cascading effect of mass firings, eliminating the positions entirely.
The U.S. Education Department has already been whittled down to half its former self with massive layoffs in March — going from around 4,100 employees to 2,500 — including all those at the regional Boston office . The firings were upheld in a Supreme Court decision in July. Trump also signed an executive order in March to begin the efforts to dismantle the U.S. Department of Education.
Massachusetts is dependent on federal money, receiving over $2 billion in federal education funding per year — a number that the state can't fully replace, according to the Healey-Driscoll administration. For instance, programs like the newly implemented free community college are based upon federal funding distributed through Pell Grants, Noe Ortega, the Massachusetts Commissioner of Higher Education, said at the time.
The cuts to the U.S. Department of Education were expected to "jeopardize a lot of the ground that states have made in increasing post-secondary access for a number of students," Ortega said in March.
Appearing before the House Appropriations Committee in May, Education Secretary Linda McMahon suggested this year's layoffs had made her department lean — even too lean in some cases. Some staffers were brought back, she said, after officials found that the cuts went too deep.
"You hope that you're just cutting fat. Sometimes you cut a little muscle, and you realize it as you're continuing your programs, and you can bring people back to do that," McMahon said.
Federal student loans
One of the department's major roles is management of the $1.6 trillion federal student loan portfolio. Student aid will be largely unaffected in the short term, according to the department's shutdown contingency plan. Pell Grants and federal loans will continue to be disbursed, and student loan borrowers must continue making payments on their debts.
About 9.9 million students receive some form of federal aid, spread across some 5,400 colleges, according to the department. Within the Office of Federal Student Aid, the department plans to furlough 632 of the 747 employees during the shutdown, although it didn't say which ones. For most student loan issues, borrowers work with loan servicers hired by the department rather than directly with FSA staff.
The department will also continue to process the Free Application for Federal Student Aid, or FAFSA , which is a key piece of how colleges and universities provide aid packages to incoming students. Certain employees involved with rulemaking around changes to student loans, part of the "One Big Beautiful Bill" passed by Republicans, also will be kept on to meet deadlines set by legislation.
Money for schools
While American schools are funded primarily by state and local money, the Education Department serves as a conduit for billions of dollars of federal aid going to state and local education agencies. During the shutdown, the department will cease new grantmaking activity and pause its advisory and regulatory role to schools and grant recipients.
But because most federal grants to schools were made over the summer , the department says it would expect minimal disruption to school districts and other grant recipients. Title I money, which goes to schools with high concentrations of students in poverty, plus funding for the Individuals with Disabilities Education Act would continue during a shutdown.
Not all federal education money arrives ahead of the school year, however. One example is Impact Aid, a program that bolsters school budgets in areas where federal land management or other activities, such as military installations, reduce the amount of taxable land to generate revenue for the district. These schools likely will see disruptions in payments. More than 1,200 districts receive that aid across all 50 states, according to a national association that represents those schools.
If the shutdown lasts longer than a week, the department says it would revise its contingency plan to prevent significant disruptions to school districts.
Civil rights investigations
Under the shutdown, the department will stop its investigations into schools and universities over alleged civil rights violations.
Since the mass layoffs in March, the office has operated under a significantly reduced footprint. The department's civil rights branch lost about half of its staff. The cuts raised questions about whether the office would be able to shrink a backlog of complaints from students who allege they have experienced discrimination on the basis of race, sex or disability status.
The department's own data has shown a decline in resolving civil rights cases, while new complaints from families have increased. During the shutdown, work on the pending cases will stop.
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