Government Shutdown Would Mean Slower Services but No Major Disruptions for Campuses

April 06, 2011

If the federal government shuts down on Saturday, some students will have to wait longer for their aid, federal oversight of colleges and lenders will lapse, and the Education Department's controversial "gainful employment" rule could be further delayed.

But a government shutdown probably would not have long-term consequences for students and colleges, according to lobbyists, student-aid administrators, and former government officials who lived through the last shutdown 15 years ago.

During that 21-day shutdown, which spanned late 1995 and early 1996, federal contractors and servicers weren't paid, and questions submitted to the Education Department went unanswered. New regulations were postponed, and federal audits and program reviews were suspended.

But three months after the shutdown ended, "any trace of it had pretty much disappeared—like water poured into sand," said Terry W. Hartle, vice president for government and public affairs for the American Council on Education.

"Assuming it doesn't last weeks, there will be little disruption on campuses," Mr. Hartle said.

A government shutdown isn't likely to have any immediate effect on university-based research, either, since projects supported by agencies such as the National Institutes of Health and the National Science Foundation are typically provided with financing a year or more in advance.

Congress has until midnight Friday to either pass a budget for the remainder of the 2011 fiscal year or approve another short-term spending bill keeping the government afloat while negotiations continue. Senate Democrats and House Republicans remain divided over how deeply to cut government spending. President Obama met with negotiators at the White House on Wednesday night and expressed optimism that a shutdown still could be avoided, but no agreement was reached.

If the government does shut down this weekend, most of the work in the executive branch and Congress would grind to a halt. Only "essential" employees would report to work, leaving many departments and Congressional offices with a skeleton staff. It's unclear, however, how many employees would be furloughed at the education and research agencies because the White House has instructed department officials not to discuss their shutdown contingency plans.

"We just don't have any information from the agencies as to how they're going to handle a shutdown," said Barry Toiv, a spokesman for the Association of American Universities.

Government contractors may continue to work if they received payment in advance or are willing to temporarily work without pay. Student loan servicers, which are paid under a contract financed last year, have already been told to keep working through a shutdown.

In 1995, only two employees in the Office of Postsecondary Education were deemed "essential" by the department: David A. Longanecker, the assistant secretary for policy and planning, and his deputy, Maureen McLaughlin. Mr. Longanecker said he spent most of his time answering phones and telling students and financial-aid administrators that the department would have to get back to them. He also became chauffeur to the secretary of education at the time, Richard W. Riley, because the department's drivers were furloughed.

The shutdown did not stop the flow of student-aid funds because colleges could continue to draw down federal funds to make awards to students, said George Chin, who was director of student aid for the City University of New York at the time.

However, the processing of new applications for aid was disrupted because other agencies must verify students' Social Security numbers, immigration status, and Selective Service registration.

If that happens again, students in programs based on academic quarters or shorter units could face delays in receiving their aid. That would have the biggest impact on for-profit colleges, where shorter terms are more common.

Still, for-profit colleges might find at least one silver lining in the looming shutdown: While the government is closed, the Education Department can't release its controversial "gainful employment" rule.

Paul Basken contributed to this report.