The U.S. Education Department’s busy fall schedule may suffer from the impending government shutdown.
Student loan payments start up again on Sunday, the day after the government runs out of money if Congress doesn’t take action this week, and in a few weeks the agency will begin talks on a new student loan forgiveness programme. Additionally, department employees are attempting to publish final regulations regarding Title IX and gainful employment. Additionally, the Free Application for Federal Student Aid will be relaunching in December with a redesigned version.
Accordingly, depending on how long the financial shortfall lasts, an October closure may be disastrous for the agency. However, whether or not the government is open, student loan payments will resume. The gainful-employment rule is anticipated to be released by the department this week in order to avoid a shutdown, but the negotiated rule-making processes and some anticipated regulatory measures are likely to be postponed.
Additionally, the government intends to designate more personnel as essential in order to ensure that progress on the FAFSA revamp is made before its December debut. The launch of the new FAFSA, which was supposed to happen on October 1 but has already been postponed, is anticipated for the end of the year.
The American Council on Education’s senior vice president for government affairs, Jon Fansmith, indicated that they understand the significance of meeting their present target in December. According to what I understand, they will have the necessary employees on hand to ensure that work is not interrupted by a shutdown.
The department’s most current shutdown plan, which was set to take effect in September 2021, called for the furloughing of approximately 90% of its workforce. The terms of the shutdown contingency plan have not yet been made public. The student loan programme would still be maintained by a small staff. The Office for Civil Rights would stop conducting investigations in the meantime, and the department would stop creating instructions, technical support, and regulatory measures. Depending on how long it lasts, a shutdown does present some additional difficulties for schools and institutions.
While it might not be apparent outside the building in the near run, Fansmith said that the department’s ability to perform properly will be constrained. The longer this situation persists, the more of an impact it will have.
Disruptions in Student Loans
Advocates for consumer protection are especially concerned about how a shutdown may effect debtors who are scheduled to make payments for the first time in more than three years due to a pandemic hiatus next month. Because of a funding gap at the agency, federal loan servicers have already reduced staff and call centre hours. Advocates are concerned that a shutdown might make the transition back to payments more chaotic and challenging for borrowers to manage.
Regan Fitzgerald, manager of the Pew Charitable Trusts’ student loan initiative, said, “As we move closer to a potential partial government shutdown, we urge the Department of Education to be as transparent as possible concerning any looming impacts on the Office of Federal Student Aid and the repayment system.” “The potential closure occurs as the system’s shift back to payments gets under way, which is a critical and challenging period for borrowers and the repayment system. It’s crucial that the department communicate clearly.
According to Scott Buchanan, executive director of the Student Loan Servicing Alliance, if the government is shut down for more than two weeks, businesses and nonprofits that handle student loan payments on the government’s behalf will likely suffer, and the department probably doesn’t have enough cash on hand to pay servicers after that.
“Servicers cannot float the government,” he declared. The department must pay its costs and hire the employees it desires.
How a government shutdown would affect education departments, services, nonprofits and government contractors?
Key operations at Federal Student Aid, the division of the Education Department that oversees the financial aid programmes, will continue for a few weeks, according to White House press secretary Karine Jean-Pierre.
“However, if it is a prolonged shutdown, lasting more than a few weeks, [it] [could] substantially disrupt the return-to-repayment effort and long-term servicing support for borrowers,” Jean-Pierre warned. “The Department of Education will try to assist borrowers as they resume repayment, as we have been saying for the past few months, but an extreme Republican shutdown, if this happens, could be disruptive,”
There is no need for a shutdown, according to Jean-Pierre.
It doesn’t have to happen, she added, adding that these are political games that are visible from the opposite side of Pennsylvania Avenue.
The Office of Management and Budget was contacted by the Education Department regarding its shutdown plans.
As of Tuesday night, it remained unclear exactly how Congress would be able to avoid a shutdown by reaching a spending agreement by the end of the week. A shutdown “feels much more inevitable” now, according to Fansmith.
To allow lawmakers more time to establish a budget for fiscal year 2024, Senate leaders reached an agreement on Tuesday over a continuing resolution that would maintain spending at current levels through November 17. However, several House Republicans have stated that any continuing resolution to finance the government must include expenditure reductions and border security measures. While everything was going on, late on Tuesday, House leaders scheduled votes for four appropriations bills that have little chance of clearing the Senate. 12 appropriations bills make up the federal budget.
According to Fansmith, there isn’t a sense of urgency among politicians to prevent a shutdown, which increases the likelihood of such an occurrence.
People don’t appear to be as concerned about avoiding one as they usually are, he declared.
Additionally, he continued, a fall shutdown would make it more challenging for Congress to pass legislation and the Biden administration to plan for the coming year.
The chaos component shouldn’t be ignored, according to Fansmith.
Additionally, according to Fansmith, October is a horrible month for the Education Department to lose the majority of its employees. For regulations to go into effect on July 1, 2024, they must be completed by November 1. Depending on the results of the presidential election in the autumn of 2016, a year-long wait could result in the rules never taking effect.
If your team is unable to work, it may take longer to finalise some regulations, and if that date is missed, there may be a year-long delay before implementation, according to Fansmith.
The department has been working on a comprehensive set of regulations that would redefine what it means to prepare graduates for gainful employment, establish new criteria for institutions to qualify for federal financial aid, and streamline agency enforcement of institutions.
Gainful-employment rule review was completed by the Office of Management and Budget earlier this month, enabling the department to publish it this week. Since the other rules in the set were delivered to OMB last week, a shutdown might cause them to be postponed. The department’s proposed amendments, which would impact programmes leading to professional licensure and state authorization reciprocity, have been delayed, according to certain higher education associations.
Fansmith said of the political appointees and other employees who aren’t furloughed, “Their ability to really manage all of the elements of the process of implementing a final rule, finalising it, and handling it will be severely limited.”