The federal government shutdown has entered its second week, and we’re beginning to see broader impacts on federal student loan services. I’ve been keeping in regular contact with key people and offices to determine specific impacts.

• Over 90% of U.S. Department of Education employees have been furloughed.
• The Ombudsman’s office, the office within the Department that handles complaints and disputes regarding federal student loans, is open and taking cases, but they are running with a reduced staff so progress will be slow, at best.
• The Default Resolution Group, the office within the Department that handles federal loan defaults, is also technically open and operating, but also running with a reduced staff. This may impact the timing and speed of loan rehabilitations, loan settlements, and financial hardship hearing requests.

Other federal loan services are still not being hugely affected:

• The Loan Consolidation office is still processing consolidation applications and it appears that, so far, they have not undergone staffing reductions or operational slowdowns.
• Contracted federal loan servicing companies (such as Sallie Mae, FedLoan Servicing, NelNet, ACS, Great Lakes, etc) which handle the day-to-day billing and operations of federal student loans (including the processing of repayment plan changes and forbearance requests), seem to not be significantly impacted thus far.
• Contracted third-party debt collection agencies acting on behalf of the U.S. Department of Education also seem to be operating normally, which means collection activities will continue for borrowers in default.
• The National Payment Center in Atlanta, which is where payments to the U.S. Dept. of Education are processed, is operating and processing payments. It may take a few days for a payment to post to your account, but that was the case even before the shutdown.

If the shutdown continues into next week, I’ll have more updates for you all then. Next week the country could potentially breach the debt limit, which may have far more serious ramifications for students, borrowers, and the entire country. Stay tuned.