May 25, 2023
Higher education is biting its nails watching the debt ceiling timer tick down in Washington.
Colleges and universities are working in the background on contingency plans if the U.S. defaults, a scenario that would lead to consequences experts say even they can’t fully comprehend.
While the schools won’t immediately shut down when the debt limit is reached, they will lose significant funding from the federal government, and students will not receive the aid they need, in some cases, to stay in class.
“Unfortunately, in the last several years, colleges and universities and financial aid offices have gotten used to a political game of chicken in Washington, D.C., and the potential for federal shutdowns, but this one is just a little bit different,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators.
“We use the word unprecedented a lot in Washington, D.C., but this truly is one of those unprecedented times, and we would expect major disruptions to federal student aid if we hit the debt ceiling,” he added.
Republicans and President Biden have been in negotiations for weeks over the debt ceiling, with Speaker Kevin McCarthy (R-Calif.) calling their most recent sit-down “productive” but not yet enough to produce an agreement.
“Don’t give up on us,” McCarthy told reporters on Monday evening.
It’s estimated that without a deal, the U.S. will default by the beginning of June, sending the markets into a tailspin and potentially causing a global recession.