US shutdown to impact student loans, FAFSA, and Education Department

WASHINGTON: Already diminished by cuts by the Trump administration, the US Education Department will see more of its work come to a halt due to the government shutdown.

The department says many of its core operations will continue in the shutdown kicking off Wednesday. Federal financial aid will keep flowing, and student loan payments will still be due. But investigations into civil rights complaints will stop, and the department will not issue new federal grants.

About 87% of its workforce will be furloughed, according to a department contingency plan.

President Donald Trump has called for the dismantling of the Education Department, saying it has been overrun by liberal thinking. Agency leaders have been making plans to parcel out its operations to other departments, and in July the Supreme Court upheld mass layoffs that halved the department's staff.

In a shutdown, the Republican administration has suggested federal agencies could see more positions eliminated entirely. In past shutdowns, furloughed employees were brought back once Congress restored federal funding.

This time, the White House’s Office of Management and Budget has threatened the mass firing of federal workers.

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. The department had about 4,100 employees when Trump took office in January. It now has about 2,500.

 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.

If the shutdown lasts longer than a week, the department says it would revise its contingency plan to prevent significant disruptions to school districts.