Amid a challenging Student loan repayment journey, the impending November 17 government shutdown adds to the growing sense of urgency.
With government funding set to run out, it falls upon lawmakers to reach a consensus and avoid the shutdown, a scenario that could worsen an already challenging situation.
Student Loan Repayment Assistance Delays
Although Speaker of the House Mike Johnson has not yet offered a continuing resolution to stop the government shutdown, he has made suggestions about a possible “laddered” strategy that would include varying the dates by which various budget bills must be passed. Democratic members, on the other hand, are against this strategy because they see it as a possible catalyst for more shutdowns.
The ramifications of a government shutdown could be severe for all Americans, including thousands of federal workers facing furloughs. This could result in delays and disruptions in essential programs, such as Social Security, and it could also impact student loan repayment assistance.
Even before federal student loan payments officially resumed in October, borrowers faced significant delays in seeking assistance from their loan servicers. This included prolonged wait times on customer service helplines and processing issues with paperwork. If the government runs out of funding, these challenges may escalate.
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Federal Agency Contingency Plans
Each federal agency is required to submit a contingency plan in the event of a government shutdown. The Department of Education’s plan for 2023 indicates that more than 89% of its staff would be furloughed during the first week of a funding lapse. This timing could be critical, as it might coincide with the administration of significant student aid programs.
While the department intends to maintain some operations, such as FAFSA processing and federal loan servicing, for a limited time, disruptions may still occur due to a funding lapse.
These potential disruptions come at a time when the Education Department is already grappling with multiple challenges as student loan payments resume. These include errors in billing statements, long wait times for borrowers seeking assistance, and increased call lengths due to heightened borrower inquiries.
Limiting the number of available customer service representatives during a government shutdown could further strain borrowers’ already challenging experiences. Although the Education Department has taken steps to enhance oversight and address issues with loan servicing, additional resources are needed to make the repayment process smoother for both borrowers and servicers.
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