Government Shutdowns and Higher Education

Congress must pass—and the president must sign—legislation that funds the federal government. When they fail to do so by a set deadline, the government experiences a funding gap, causing it to shut down with limited exceptions. How does a government shutdown impact both the country in general and higher education institutions specifically?

Background

Twelve appropriations bills must be signed and passed by October 1, the start of the new fiscal year, to fund the government for the following fiscal year. If Congress is unable to complete the appropriations process by October 1, it can enact a continuing resolution, which approves funding—typically at the previous funding rate—for a set duration. The start of the fiscal year was moved to October 1 in 1976; since then, the government has enacted at least one continuing resolution in all but three years. When the government fails to enact spending legislation by a set deadline, there is a funding gap.

Government Shutdown Overview

When there is a funding gap, the Antideficiency Act requires the government to cease operations, except for certain circumstances; consequently, the government shuts down. Unless deemed excepted or essential, government employees are furloughed and instructed not to work, and nonessential government programs cease to operate. Essential functions are determined by agencies based on guidance from the Office of Management and Budget (OMB). Mandatory programs, such as Social Security and Medicare, largely continue to operate as usual during a shutdown. A partial shutdown occurs when the government enacts some but not all of the 12 appropriations bills and a funding gap for the remaining agencies exists.

While government shutdowns—especially lengthy ones—used to be rare, they have become more common. After averting funding gaps since 1996, the government shut down for 16 days in 2013. The government also shut down for two days in 2018 and partially shut down for 34 days—the longest shutdown in history—in 2018–19.

What Happens During a Government Shutdown?

OMB annually provides agencies with updated instructions on how to prepare for and operate during a shutdown. Using this guidance, agencies maintain and update contingency plans for potential shutdowns. These contingency plans include the activities that will and will not continue during a shutdown; how employees will be impacted during a shutdown; and an estimate for how long an agency needs to shut down and reopen, among other details. As the likelihood of a shutdown increases, OMB and federal agencies will often release updated and additional guidance and memoranda. For example, many agency contingency plans were updated in September 2021 in preparation for a shutdown, even though one never occurred. Once offices fully or partially shut down, they do not operate as usual until new funding is approved.

Broad Impact

Shutdowns can cause a wide area of short- and long-term disruptions, though the consequences are not uniform. Some agencies and people are extremely impacted during a shutdown, whereas many others might only notice minor inconveniences. Some of the people most affected are the government employees who are furloughed or required to work without pay until new funding is approved. Other effects stemming from the most recent shutdown included the pause of some Environmental Protection Agency and Food and Drug Administration inspections; the closure of immigration courts; the pause of some Federal Bureau of Investigation work; and the delay of some rental assistance and grant programs. The longer a shutdown lasts, the more disruptive it can be.

Brief shutdowns cause relatively minor economic consequences. The Congressional Budget Office estimated that the 34-day partial shutdown across 2018 and 2019 cost the broader economy $11 billion and delayed about $18 billion in federal discretionary spending. Traditionally, shutdowns have not substantially affected financial markets. Other federal funding issues, such as breaching the debt limit, would be much more devasting.

Impact on Higher Education

Typically, institutions of higher education do not feel many negative effects from a short-term government shutdown. The impact of a shutdown on higher education depends on a variety of circumstances. Timing, for example, is a key variable: a government shutdown around the start of the academic year on July 1 would have the potential to cause more disruptions for colleges and universities than a shutdown occurring midsemester.

Shutdowns impact federal agencies differently, given that some agencies have more essential duties than others. The Department of Education (ED) would likely cease almost all operations during a shutdown. ED’s contingency plans, last updated in 2021, said that more than 90 percent of employees would be furloughed.

The impacts of a government shutdown can often persist even after funding is approved. Returning employees need to address the various issues that occurred or piled up during the shutdown while also handling their typical portfolio.

A shutdown could impact areas of higher education as follows:

Student Aid

Typically, student aid is not impacted by a shutdown. Since financial aid is disbursed at the beginning of the semester, it should already have been received if a midsemester shutdown were to occur. Additionally, because most aid programs are funded a year in advance, they should not be impacted by a short-term shutdown.

ED and the Office of Federal Student Aid use contractors for most student-aid operations, which should minimize disruptions. Borrowers looking for assistance specifically from ED will not receive it during a shutdown. Additionally, students applying for funding from ED, whether loans or loan forgiveness, could experience delays.

Research and Federal Grant Funding

Institutions that have already received grant funding should not face issues during a shutdown, yet they likely would not be able to receive new grants or technical assistance from federal agencies. Previous instructions from the National Science Foundation noted that a short funding lapse resulted in “missed panels, a backlog of proposal actions, and delays that may result in the cancellation” of some research and related activities. In ED’s 2021 contingency plan, most employees involved in those grant programs would be furloughed. Additionally, research agencies cannot begin new programs, issue new grants, enter into new contracts, or review existing applications during a shutdown.

Veterans

Depending on which activities are deemed essential, benefit-processing delays for veteran students could occur. Similar to student aid, the period for certifying GI Bill benefits generally starts in August, so most benefits should have already been certified.

International Students

Some immigration services remain operational during a shutdown, whereas others do not. For the U.S. State Department, consular services remain operational—both domestically and abroad—while funds remain available. However, the U.S. Department of Homeland Security may not process applications for changes in status in a timely manner, as they will only carry out exempt activities such as law enforcement. For example, H-1B visa applications were not reviewed.

Regulations

The issuance of proposed and final rules, review of comments, and occurrence of other regulatory actions could be delayed during a shutdown. A prolonged shutdown—or a shutdown occurring later this year—could delay the release of the final Title IX regulations, for example.

Government Support

Broadly, the federal government cannot provide much assistance during a shutdown. Most government employees will not answer phone calls, respond to emails, or update resources. Other types of services will be paused as well. For example, in past shutdowns, users could not access the Integrated Postsecondary Education Data System. Additionally, the longer a shutdown persists, the more issues pile up and the more opportunity there is for crises to arise due to an understaffed government.