US government closure: will the student loans be affected? Here's what we know

According to the education department, several key functions will remain in effect during the closing of the US government that took place on Wednesday after no financing agreement between Trump and Democrats was reached. According to AP, the federal financial aid will still be distributed, and the student loans payments are yet to be made. An important responsibility from the department oversees the $ 1.6 trillion federal student loan portfolio. According to the conclusion of the contingency plan, student aid will usually not be affected in the short term. Pell grants and federal student loans will still be distributed, and borrowers still have to make their loan payments. About 9.9 million students receive federal financial aid over about 5.400 colleges, the department says. During the conclusion, 632 out of 747 employees in the Federal Student Aid office are expected to be inundated, although the department has not indicated which staff members are. Most lenders handle loan services contracted by the department, rather than communicating directly with the FSA staff. The department will also process the free application for Federal Student AID (FAFSA), which plays an important role in the way colleges and universities determine financial assistance for new students. In addition, some staff working on the changes in the student loan policy will remain on duty part of the Republican supported “One Big Beautiful Bill” to reach the deadlines with legal mandate. According to Persis Yu, Deputy Executive Director and Managing Advocate at the Student Lender Protection Center, the longer Washington takes to reach an agreement, the more issues are likely to emerge, USA Today reports. ‘Borrowers need service more than ever before’. “This moment is actually very important in the student loan cycle, because we are at the point of millions of borrowers who do not need their student loans more than ever before.” Said Yu. According to the report, Betsy Mayotte, president and founder of the Institute of Student Loan Advisors, said that borrowers should still contact their borrowers and sellers with any questions, and added: “The only time it becomes questionable is whether the closure would take a very long time – weeks or months.” “Remember that most of the functions are done by outdoor sellers, and that they will continue in the foreseeable future,” Mayotte said. “If the shutdown lasts for some reason very long, you need to pay attention to the studentity of the student.gov to see if something is changing,” Mayotte said further. (With inputs of AP)