How Will the Government Shutdown Affect Student Loans, FAFSA and the Education Department?

Already diminished by cuts by the Trump administration, the U.S. Education Department will see more of its work come to a halt due to the government shutdown.

The department says many of its core operations will continue in the shutdown kicking off Wednesday. Federal financial aid will keep flowing, and student loan payments will still be due.

But investigations into civil rights complaints will stop, and the department will not issue new federal grants. About 87% of its workforce will be furloughed, according to a department contingency plan.

Jump straight to:

• Will FAFSA be affected?
• What about my student loans?

Since he took office, President Donald Trump has called for the dismantling of the Education Department, saying it has been overrun by liberal thinking. Agency leaders have been making plans to parcel out its operations to other departments, and in July the Supreme Court upheld mass layoffs that halved the department’s staff.

In a shutdown, the Republican administration has suggested federal agencies could see more positions eliminated entirely. In past shutdowns, furloughed employees were brought back once Congress restored federal funding. This time, the White House’s Office of Management and Budget has threatened the mass firing of federal workers.

Appearing before the House Appropriations Committee in May, Education Secretary Linda McMahon suggested this year’s layoffs had made her department lean — even too lean in some cases. Some staffers were brought back, she said, after officials found that the cuts went too deep.

“You hope that you’re just cutting fat. Sometimes you cut a little muscle, and you realize it as you’re continuing your programs, and you can bring people back to do that,” McMahon said. The department had about 4,100 employees when Trump took office in January. It now has about 2,500.

Here is what the Department of Education does and how a shutdown is expected to affect that work.

FAFSA during the shutdown

The department will continue to process the Free Application for Federal Student Aid, or FAFSA, which is a key piece of how colleges and universities provide aid packages to incoming students.

A spokesperson for the California Student Aid Commission told KQED that processing of applications for FAFSA “will continue as normal,” along with applications for student funding through the California Dream Act.

“CSAC does not anticipate any disruption” from the government shutdown, said Executive Director Dr. Daisy Gonzales in a statement. “CSAC encourages students to be ready to apply for financial aid through the FAFSA or CADAA,” she said, noting that “call centers will be open to answer any calls from both the Federal Student Aid and CSAC.” More guidance about support during the shutdown is available from Federal Student Aid.

This October will be the first time in two years that the FAFSA has launched on time, due to the glitchy rollout of the latest FAFSA form. In past cycles, students from mixed status families have also expressed concern over applying to student aid programs.

According to the CADAA website, student “information is never shared with the federal government or used for immigration enforcement.”

Federal student loans during the shutdown

One of the department’s major roles is management of the $1.6 trillion federal student loan portfolio. Student aid will be largely unaffected in the short term, according to the department’s shutdown contingency plan.

Pell Grants and federal loans will continue to be disbursed, and student loan borrowers must continue making payments on their debts.

About 9.9 million students receive some form of federal aid, spread across some 5,400 colleges, according to the department. Within the Office of Federal Student Aid, the department plans to furlough 632 of the 747 employees during the shutdown, although it didn’t say which ones. For most student loan issues, borrowers work with loan servicers hired by the department rather than directly with FSA staff.

Certain Department of Education employees involved with rulemaking around changes to student loans, part of the “One Big Beautiful Bill” passed by Republicans, also will be kept on during the shutdown, to meet deadlines set by legislation.

Money for schools

While American schools are funded primarily by state and local money, the Education Department serves as a conduit for billions of dollars of federal aid going to state and local education agencies. During the shutdown, the department will cease new grantmaking activity and pause its advisory and regulatory role to schools and grant recipients.

But because most federal grants to schools were made over the summer, the department says it would expect minimal disruption to school districts and other grant recipients. Title I money, which goes to schools with high concentrations of students in poverty, plus funding for the Individuals with Disabilities Education Act would continue during a shutdown.

Not all federal education money arrives ahead of the school year, however. One example is Impact Aid, a program that bolsters school budgets in areas where federal land management or other activities, such as military installations, reduce the amount of taxable land to generate revenue for the district. These schools likely will see disruptions in payments. More than 1,200 districts receive that aid across all 50 states, according to a national association that represents those schools.

If the shutdown lasts longer than a week, the department says it would revise its contingency plan to prevent significant disruptions to school districts.

Civil rights investigations during the shutdown

Under the shutdown, the department will stop its investigations into schools and universities over alleged civil rights violations.

Since the mass layoffs in March, the office has operated under a significantly reduced footprint. The department’s civil rights branch lost about half of its staff. The cuts raised questions about whether the office would be able to shrink a backlog of complaints from students who allege they have experienced discrimination on the basis of race, sex or disability status.

The department’s own data has shown a decline in resolving civil rights cases, while new complaints from families have increased. During the shutdown, work on the pending cases will stop.

This story contains reporting by KQED’s Nisa Khan and Carly Severn, and AP Education Writer Collin Binkley.