Will Your Student Loans Be Impacted โฃBy A Government Shutdown?
A potential government shutdownโ raises concernsโฃ for millions of Americans with federal studentโ loans. While the core functions of โฃFAFSA processing andโ federal student aid disbursement areโ expectedโ to โฃcontinue, significant disruptions and delays are likely in other areas, potentially leaving borrowersโ facing unresolved issues with limited recourse.
FAFSA &โ Federal Student Aid: Core Functions Expected to Continue, But Support might potentially be Limited
The Department of Education is expected to maintainโข the flow of FAFSA applications and federal student aid, even with a shutdown. Though, the staff responsible for addressing complex issues and providing individual assistance โare highly vulnerable to furlough. This meansโฃ students and families encountering problems with the FAFSA process may find โคthemselves without โขsupport toโ resolveโ them, potentially facing significant hurdles.
Student Loan Forgivenessโค Programs Face potential Delays
Borrowers โขpursuing federal studentโ loan โforgiveness through programs like Public Service Loan Forgiveness (PSLF), Total and Permanent Disability discharge (TPD), and Borrowerโ Defense toโ Repayment โขcould experience processing delays. Department โขof Education staff areโข integral โto โคthe implementation and approvalโ of โthese โprograms, and a shutdown would likely haltโ or slow their โขwork.
This comes โฃat a particularly challenging time for many borrowers. The TPD discharge โprogram has been strugglingโค with administrative issues and delays throughout the year โfollowing a transition to a new processing system. Furthermore,the Department of Education is currently facing a class action lawsuit regarding ongoing delays related โฃto Income-Driven Repayment (IDR) student loan forgiveness and the PSLF Buyback program – which allows borrowers to qualify for forgiveness by making a lump sum payment for past non-qualifying deferments or forbearances. A shutdown would likely worsen these existing problems, extending wait timesโข for relief.
Dispute Resolution Services Will Be Substantially Impacted
borrowers withโ disputes regarding their federalโ student loans – such as misapplied payments โor wrongly denied forgivenessโค – will โalso โขbeโค affected.โ The โขDepartment of education’s contingency โplan indicatesโฃ a likely furlough of most, if not all, staff within โฃthe Feedback unitโฃ at the Office of Federalโ Student Aid and the Ombudsman โฃgroup. These units are responsible for handling borrower disputes.
As of August, the FSA Feedback โฃunit already had a significant backlog of 41,507 open cases, while the Ombudsman group was managing 27,006. โA government shutdown is expected toโข dramatically increase theseโ backlogs,leaving borrowers with โฃunresolved issues for an extended period.
Sources:
* โ https://www.ed.gov/sites/ed/files/about/shutdown/contingency-plan-2024.pdf