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The Shutdown and Your Federal Student Loans: What You Need to Know

September 30, 2013 | Adam S. Minsky, Esq. Current Events

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So, it looks like the federal government is shutting down due to Congressional gridlock. I’ll save the political commentary for another time—I know you all are wondering how this will impact your federal student loans.

I’ve contacted the U.S. Department of Education directly, and I’ve also spoken with members of the advocacy community who have contacts in the federal government. My understanding is that there should NOT be an immediate measurable impact on federal loan servicing. The Dept. of Education will not be shutting down completely, and day-to-day operations and loan servicing should continue largely uninterrupted.

However, if the shutdown extends beyond a week or two, we will likely begin to see major delays, disruptions, and snags, including with:

  • Repayment plan changes
  • Income-Based Repayment (IBR) payment calculations and recalculations
  • Consolidations
  • Rehabilitations
  • Settlement decisions
  • Complain resolutions

It is unclear how third-party agencies will be impacted, including loan servicing companies (such as Sallie Mae, AES, and Great Lakes) or federally contracted debt collection agencies. If the shutdown continues, employees will be furloughed, which will lead to longer wait times for customer service and significant processing delays across the board.

If the shutdown continues into November or beyond, it is very possible that we will see a major disruption of federal student loan disbursements to colleges and universities, which could severely impact current students.

The bottom line is this: right now, things should continue more or less as normal. The longer the shutdown lasts, the more severe the impact will be. I will endeavor to keep all of you posted on developments. In the meantime, you can read up on the projected impacts of the shutdown on higher education here and here.

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Current Events

About Adam S. Minsky, Esq.

Adam S. Minsky founded the first law office in Massachusetts devoted entirely to assisting student loan borrowers, and he is one of the only attorneys in the country practicing in this area of law. He provides counsel, legal assistance, and direct advocacy for borrowers on a variety of student loan-related matters. He regularly speaks to students, graduates, and advocates about the latest developments in higher education financing.

Books by Adam S. Minsky

The Student Loan Handbook for Law Students and Attorneys

The Student Loan Handbook for Law Students and Attorneys

Student Loan Debt 101

Student Loan Debt 101: The Definitive Guide to Understanding and Managing Your Student Loans

Student Loans for Parents and Cosigners

The Student Loan Guide for Parents and Cosigners

617-936-2788
asminsky@minsky-law.com
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Boston, MA 02110

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