With a potential government shutdown looming, we’re all thinking the same thing: how will this affect student loan borrowers. (No? Just us?) Well, that’s been on the mind of our resident regulatory expert, Betsy Mayotte. With a little help from the U.S. Department of Education (but, sadly, not Piglet), she outlines four things you need to know.
In response to this weekend’s events on the Hill, which seemed to bring us closer to a partial government shutdown, the Department of Education issued the federal financial aid industry some guidance as to what to expect if such a thing happened.
While we’ve been here before, and Congress typically manages to come to agreement at the very … last … minute, it’s still good to know what to expect if a shutdown does happen.
1. New loans and other forms of federal aid will still be disbursed. The government uses multiple systems during the financial aid process. This includes ones that process new promissory notes and edits from schools, as well as ones that actually disburse your money to schools. These will all remain operational during the shutdown.
2. You will still have to make payments on your federal student loans. None of the federal servicers will close any of their operations or services. Your payments will still be due on their regular due dates. On the bright side, with your servicers staying open, any paperwork you submit will be processed.
3. Your pending Consolidation loan may be delayed. While the Department’s announcement isn’t specific on this point, it seems that applications for new Consolidation loans will be accepted and processed; however, funding these loans themselves may be delayed. Borrowers consolidating or rehabilitating defaulted loans may also have to wait to complete these processes.
4. You can still get your questions answered. With two small exceptions, every call center will remain open and operational. This includes the Ombudsman, National Student Loan Data System (NSLDS®), and loan servicers.
Why Such A Small Impact?
Out of the 4 million or so federal employees, around 3.3 million are considered “essential,” which means these people will keep working regardless of the outcome of the next day or so. (This is why things like Social Security and other programs will also stay running.) Finally, keep in mind that there hasn’t been an actual government shutdown since 1995.
Have a question about your student loans? Betsy has the answer—Just Ask SALT™.
(Update 10/1/13: Well, apparently I issued some famous last words above. Much like Piglet here, the government entered shutdown mode this morning. Nothing needs to change about the information in this post—except we don’t need the word “potential” in the title anymore. If something should change on how this shutdown will impact your student loans or financial aid, we’ll be sure to let you know.)