Will a Government Shutdown Impact College Students?

• Colleges and universities have minimal reliance on the federal government.
• Experts predict a government shutdown wouldn't impact the lives of most college students.
• International students and student veterans, however, may be more impacted than others.

A government shutdown may sound alarming, but for the average college student, it is unlikely to impact their studies.

The federal government is teetering on the brink of a government shutdown for the second time this year, as a stop-gap measure is scheduled to expire on Nov. 19. Many college students rely on the federal government financial aid programs to afford college, but because those funds have largely already been disbursed, the day-to-day life of the average college student likely won't change if a shutdown does occur.

A shutdown may, however, impact international students and student veterans more than others.

Some are also worried that a potential shutdown could complicate the rollout of the Department of Education's new Free Application for Federal Student Aid (FAFSA). The department plans to release the new FAFSA in December.

A government shutdown would begin Nov. 19 if lawmakers cannot pass a budget or another temporary spending plan before then.

Impacts Minimal for Students During Shutdown

Thankfully for college students, the academic school year is already underway.

That means federal financial aid — including federal student loans — has already been disbursed to students. Once that money is handed out, the federal government's role in funding higher education is largely satisfied.

The American Council on Education (ACE) said a shutdown occurring mid-semester is more preferable to one occurring at the start of the academic year.

"Typically, institutions of higher education do not feel many negative effects from a short-term government shutdown," ACE wrote. "The impact of a shutdown on higher education depends on a variety of circumstances. Timing, for example, is a key variable."

The Office of Management and Budget put forth a contingency plan in case of a shutdown for the Department of Education (ED) in 2021. The plan states that for many grant and loan programs, as long as there are enough funds, ED may continue distributing funds even during a shutdown. So, according to the plan, if a shutdown were to carry over into the spring 2024 semester, financial aid should not be impacted.

"For programs meeting the significant damage standard, employees could be brought into work as 'excepted employees' to provide payments and fulfill obligations to grantees and other recipients," the plan stated.

There are some programs and functions that ED cannot justify keeping employees focused on during a shutdown. According to the plan, those include:

• Federal work-study programs
• Supplemental Educational Opportunity grants
• Customer service
• Administrative functions not related to student aid
• Development of new programs, policies, and activities

The contingency plan said more than 90% of ED's employees could be furloughed in the event of a shutdown.

ACE added that there may be some delays in processing benefits for veteran students. However, the period for certifying GI Bill benefits generally starts in August, so a shutdown beginning in November should have minimal impact.

International students may also be impacted. ACE stated that the U.S. Department of Homeland Security may not process applications for changes in status during a shutdown, so some visa applications may not be reviewed.

Students relying on the Supplemental Nutrition Assistance Program (SNAP) to pay for food and groceries won't be impacted immediately should there be a shutdown, Secretary of Agriculture Tom Vilsack said during a September press briefing. If the shutdown extends longterm, however, he said there would be some serious consequences" for SNAP.

Lastly, ED's contingency plan states that the Office for Civil Rights would pause all investigations of civil rights complaints during a shutdown, potentially impacting former and current college students.

Questions Surround the FAFSA

The Office of Federal Student Aid (FSA) is rolling out a new FAFSA form, dubbed the Simplified FAFSA.

This Simplified FAFSA has been a significant undertaking for the department. As a result, the process has been delayed, and ED won't release the new form until December, rather than the customary Oct. 1 release date.

Another delay could place more of a burden on financial aid administrators and students. Robert Kelchen, head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, wrote that he worries a shutdown may further delay the department's planned release of the Simplified FAFSA.

ED's 2021 contingency plan stated that processing FAFSA applications would "continue for a very limited time." However, students should expect some disruptions nonetheless.

Resumption of Student Loan Payments Unlikely to Be Impacted

Most federal student loan borrowers resumed repayment on their loans in October, and many of those borrowers are likely wondering what a shutdown could mean for repayment.

In reality, a shutdown is unlikely to impact the resumption of student loan payments. Third-party student loan servicers primarily handle loan payments, so furloughs won't affect these contractors.

There may, however, be some delays in processing debt forgiveness programs like Public Service Loan Forgiveness (PSLF).

A shutdown may interfere with President Joe Biden's new plan for widespread student loan forgiveness.

ED promised to begin the process of negotiated rulemaking to institute a new forgiveness plan after the U.S. Supreme Court struck down Biden's initial plan. Negotiators convened for talks in mid-October and early November, with the final negotiations set for Dec. 11 and 12.

One negotiator asked the department what would happen in the case of a government shutdown. ED's representative did not share specifics of how such a shutdown would impact negotiations.