- Congress allows funding to lapse, federal government enters partial government shutdown
- Department of Education begins rulemaking to implement reconciliation loan changes
Congress allows funding to lapse, federal government enters partial government shutdown
Lawmakers in the House and Senate were unable to agree on a short-term funding bill – called a continuing resolution (CR) – to avoid a partial government shutdown. September 30 marked the end of fiscal year 2025 (FY25). Funding lapsed as of October 1.
The political dynamics for extending FY25 funding have been extremely difficult. While the House passed a short-term spending deal that would have extended government funding through November 21, this plan was rejected by the Senate. Because appropriations bills (including funding extensions) are subject to the filibuster and therefore will require some Democratic votes, Senate Democrats see this as one of the few opportunities they have to secure legislative wins or to enact more control over the Trump Administration’s use of funds.
As we have covered before, the terms of the FY25 CR gave the Trump Administration wide latitude to reprogram funds within existing accounts. Beyond the reshuffling of dollars, the Administration has taken unprecedented liberties in the awarding of appropriated funds, discontinuing longstanding grant awards and, in some cases, terminating entire programs that appropriators had funded. Democrats remain concerned that – absent stronger language protecting the use of appropriated dollars – these trends will continue. Senate Democrats are also hoping to secure extensions to expiring Affordable Care Act (ACA) health care subsidies and to reverse some of the cuts made to Medicaid in the One Big Beautiful Bill (OBBB) reconciliation legislation.
The Trump Administration continued to push for a “clean” CR with no new policy riders or restrictions, resulting in a stalemate.
To put more pressure on Senate Democrats, the Office of Management and Budget (OMB) sent a memo to all Executive Branch agencies instructing them to prepare a Reduction in Force (RIF) plan for all non-essential staff. OMB is directing agencies to permanently terminate – rather than simply furlough – those staff in the event of a shutdown. Per the memo, all employees who administer programs or activities that receive discretionary funding (and where that funding has lapsed) and where the program is not consistent with the President’s priorities would be subject to these RIFs. The memo concludes by stating, “[w]e remain hopeful that Democrats in Congress will not trigger a shutdown and the steps outlined above will not be necessary.”
As with past government shutdowns, all non-essential federal personnel have been furloughed, including those at the Department of Education (ED), Department of Labor (DOL), and other federal agencies that work closely with community colleges. Administration of federal financial aid should continue as usual, as those programs receive mandatory funding. However, institutional grant administration, technical assistance and support functions, and policy offices will likely be disrupted for the duration of the shutdown. Whether those staff are ultimately subject to a new RIF is not yet known. At ED, many of the staff who would meet the OMB’s criteria for termination and/or whose work was not deemed critical to meet a statutory requirement were already terminated in March’s RIF or other layoffs earlier this year. The Department of Labor (DOL) has undergone similar reductions in staffing in the preceding months. AACC’s David Baime has more information on the shutdown and its implications for program administration and agency operations in the Community College Daily.
Department of Education begins rulemaking to implement reconciliation loan changes
This week, the Department of Education (ED) kicked off one of two upcoming negotiated rulemaking sessions to implement the higher education components of H.R. 1, the “One Big Beautiful Bill” (OBBB) reconciliation legislation.
The table – the “Reimagining and Improving Student Education (RISE) Committee – will address changes to student loan origination and repayment policies, including new institutional discretion to lower loan maximums on a programmatic basis. Despite comments from AACC, community colleges were not given their own seat at the negotiating table. Instead, public non-profit institutions are represented by two negotiators from public four-year colleges.
The first week largely focused on establishing committee procedures, clarifying items in the Department’s initial issue papers, and discussing how to define a professional student for the purpose of new loan limits.
Of note, Department of Education officials did clarify that they are working toward an effective date of July 1, 2026, for the implementation of the OBBB. While the statute has an effective date of July 1, 2026, there was a question on whether the Department would ask for an extension to comply with Master Calendar rules. These rules state that final rules must be published by November 1 to go into effect July 1 of the following year. Agency officials shared that they have interpreted the statute’s effective date to signal Congress’ intent to waive the Master Calendar requirements. Instead, ED officials will have a final rule out no later than June 1, 2026, to go into effect by July 1.
The panel will continue negotiations this week and will meet again in November. At the conclusion of the sessions, they will vote on regulatory text proposed in the edited issue papers.
A second panel – the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee – will be tasked with implementing Workforce Pell, the new accountability system that measures the earnings of program completers against a comparison group of high school graduates, and Gainful Employment/Financial Value Transparency regulations. This panel will meet in December and January.