90% of Education Dept. staff could be furloughed
A potential government shutdown might result in 90% of the U.S. Department of Education’s employees being furloughed, according to Kantrowitz. Furloughed refers to a leave of absence, often associated with government shutdowns, derived from the Dutch word “verlof”. As of September 2021, the department employed approximately 4,100 part-time and full-time workers.
However, even with minimal activity at the Education Department, student loan operations should continue without significant disruptions.
Minimal impact on student loans
Kantrowitz reassures that student loans should experience minimal disruption as the majority of loan processes are managed by loan servicers and contractors, rather than the Education Department. Loan servicers can handle monthly payments and processing without direct assistance from the department.
New borrowers should also not face any interruptions, as most federal student loans are financed through mandatory funding. Funding impacted by a government shutdown is discretionary and determined annually by Congress.
Delays for certain borrowers
While most borrowers will not be significantly affected, there are some instances where delays may occur due to the impasse in Washington. For example, borrowers seeking Public Service Loan Forgiveness aid, which allows certain government or nonprofit workers to have their student debt canceled after ten years, require confirmation of eligibility from the Education Department. During a shutdown, these borrowers could encounter delays in applying for loan forgiveness.
Borrowers attempting to make changes to their loans, such as consolidation, may also face obstacles. If the Federal Student Aid Information Center staff need to consult the Education Department, borrowers seeking information or repayment restarts may experience delays. Nonetheless, borrowers can obtain most necessary information from their loan servicer or studentaid.gov.
Borrowers should still be able to modify their repayment plans and certify their current income under income-driven repayment plans without significant hurdles.
The Education Department has not yet responded to requests for comment.
