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Congress failed to pass a short-term continuing resolution to keep the federal government operating past September 30, 2025, the end of the 2025 fiscal year. This has triggered a shutdown of the federal government with implications for higher education institutions and their governing boards.
What Does a Government Shutdown Mean for Higher Education?
Although institutions could face additional challenges in the event of a long-term government shutdown, not all U.S. Department of Education (ED) functions will cease in the short term. It is important to note that ED programs and activities carried out with mandatory funding (funding not subject to annual appropriations) and those that have been funded through previous years’ appropriations will continue.
Federal Student Aid Disruptions
- Issue: Some key operations (such as processing Free Applications for Federal Student Aid, FAFSA®; disbursing Pell Grants and Federal Direct Student Loans; and servicing federal student loans) will continue for a limited time. In the event of a longer shutdown, Pell Grants and student loan disbursements could face delays depending on the length of the funding lapse.
- Why it Matters: Financial aid offices could see increased student concerns and pressure to provide guidance.
Research Funding and Grants
- Issue: Programs with mandatory funding can make obligations and payments during a shutdown, as can discretionary programs to which funds have already been obligated. However, peer review panels and new grant awards will cease.
- Why it Matters: Colleges and universities that rely heavily on federal research dollars could experience challenges depending on funding sources, but most programs with funding already obligated will continue during a short-term shutdown.
Sectorwide Impacts
- Issue: In the event of a longer shutdown, institutional budgets could be strained if tuition payments linked to delayed federal aid are postponed.
- Why it Matters: Public perception of higher education’s reliance on federal stability could intensify with a longer shutdown, increasing the importance of trustee-level advocacy.
Reputational and Advocacy Considerations
- Issue: Trustees should anticipate increased media and public attention focused on how shutdowns impact students.
- Why it Matters: Institutions might need to step up their advocacy role, reinforcing the importance of stable federal investment in higher education.
RISE Negotiated Rulemaking
ED has confirmed that its Reimagining and Improving Student Education (RISE) negotiated rulemaking session will continue to meet as scheduled the remainder of this week and negotiated rulemaking committees related to the implementation of the One Big Beautiful Bill Act can meet during a government shutdown. However, a prolonged shutdown could impact ED’s broader capacity to prepare, publish, and enforce new rules.
Key Implications for Governing Boards
A government shutdown presents both significant risks and strategic opportunities for boards, requiring vigilance, resilience, and proactive advocacy on behalf of students and institutions.
Risks
- Program disruptions
- Delayed federal guidance
- Heightened student uncertainty
Opportunities
- Strengthen board-level oversight on compliance
- Enhance institutional resilience planning
- Position the institution as a strong advocate for students during federal uncertainty
Recommended Board Actions
Boards should be nimble; anticipate financial pressures, operational disruptions, and reputational scrutiny; and position their institutions as strong advocates for stable and sustained federal investment in higher education.
- Ensure Student Support: Administrations should prepare FAQs, communications, and contingency plans for students affected by delays in aid or benefits.
- Safeguard Research Continuity: Assess exposure to federal program interruptions and identify alternative options, if necessary.
- Communicate Proactively: Institutional leaders should reassure students, families, and faculty members while also engaging policymakers.
- Monitor RISE Developments: Assign a trustee or committee to track the committee sessions during the shutdown and provide updates to the board. Follow AGB’s Top Public Policy Issues Facing Governing Boards for the updates.