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You still have to pay your student loans during government shutdown
The U.S. government officially shut down on Oct. 1 as Congressional leaders failed to reach an agreement on short-term funding after the end of September, which means many “nonessential” federally funded agencies and programs will stop work and furlough employees until an agreement is reached.
The Department of Education will furlough roughly 87% of its staff, according to the agency’s contingency plan. The department manages the government’s $1.6 trillion student loan portfolio and disburses funding and grants to schools and individuals, along with other duties related to K-12 and higher education.
Here’s what current borrowers, college students and those applying for federal aid need to know.
Which Department of Education functions are impacted by the shutdown?
During the shutdown, the Department of Education will pause new grantmaking activities and investigations into civil rights violations, according to the contingency plan.
But since most grants are disbursed over the summer, the impact to institutions and individual recipients should be minimal, the department says.
Can I still apply for federal financial aid?
Yes. The remaining Department of Education employees will ensure federally mandated programs like the Free Application for Federal Student Aid and aid and loan disbursements can continue to operate, according to the department’s contingency plan. The plan also explicitly states that FAFSA processing should not be impacted by the shutdown.
The FAFSA, the form millions of students and families need to submit to be considered for federal grants and loans, as well as institutional aid from their college, opened on Sept. 24 this year, ahead of its official Oct. 1 opening date.
Do I still need to make student loan payments?
Yes. Despite the shutdown, federal student loan payments will still be due.
Federal student loan borrowers mainly interact with their loan servicers to make payments, change payment plans and resolve issues. While the federal government oversees those servicers, most borrowers shouldn’t have issues getting the assistance they need during the shutdown unless they have a problem with their servicer.
“The Education Department itself is not servicing your loan. You’re paying your loan each month to a loan servicing company,” Kate Wood, a lending expert at NerdWallet, tells CNBC Make It. “Your servicer is definitely remaining open, and they are definitely collecting payments.”‘
What can I do if I have an issue with my loans?
Reaching out to your servicer if you’re having trouble paying your loans or have questions about your account is still “generally your best bet,” Wood says.
Customer service had already slowed down at the Department of Education due to the mass layoffs at the agency earlier this year. So while it may still be difficult to get in touch with the department for those who need to, that’s not necessarily a result of the shutdown.
Students who are in the process of getting aid or loans should connect with their school counselor or financial aid office if they need assistance with the FAFSA.
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