Government Shutdown 2021: Is Federal Financial Aid In Danger?

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A government shutdown could affect many facets of life, from leaving government employees furloughed to closing national parks and museums. However, a short-term shutdown should have little to no impact on federal financial aid for colleges and universities, experts indicate. But with that in mind, there are still certain aspects to keep a close eye on.

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Terry Hartle, senior vice president for government relations and public affairs at the American Council on Education, told Inside Higher Ed, “People trying to get immediate questions answered from government agencies — about how to do things like implement vaccine mandates — won’t find anybody answering the phone. It’s obviously a failure of our democracy, but it doesn’t significantly impact students or institutions.”

Hartle went as far as to call the prospect of a shutdown “an annoyance” to colleges and universities.

To clarify, a shutdown won’t affect student financial aid, since the Office of Federal Student Aid at the Department of Education uses outside contractors for most of its administrative work. Since financial aid goes out at the beginning of the semester, a government shutdown shouldn’t delay financial aid payments — unless it lasts into the start of the winter semester.

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It also would not change the terms and conditions of federal student loans, according to Forbes. The ongoing student loan payment pause and interest freeze that President Joe Biden extended through Jan. 31, 2022, would remain in place.

Institutes of higher learning may face delays in processing grant funding and grant applications, though, since the National Science Foundation and the National Endowment for the Humanities are among the federal agencies that close completely during a shutdown, according to Inside Higher Ed. Therefore, the only people who should foresee a potential issue with the government shutdown in terms of it affecting their financial aid payments are federal workers themselves, as they could be furloughed. But even so, considering the extended interest freeze mentioned above, the shutdown would either need to last through February for this to truly become an issue.

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Congress is voting again today to pass the resolution for funding of federal departments and agencies through the next fiscal year. If the government shuts down, it would be the second shutdown in three years. However, William Hoagland, a former congressional staffer who now works at the Bipartisan Policy Center, told Reuters that the pandemic creates great incentive to avoid a shutdown or, at least, keep it short.

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CDC director Anthony Fauci shared similar sentiments with the Washington Post last week, calling a pandemic the “worst time” for a shutdown that would leave public health agencies short-staffed.

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In the meantime, Democrats drop the debt ceiling measure from the funding legislation, it could help avert a shutdown, Reuters reported.

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Last updated: October 6, 2021

About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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