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Consumer Financial Services Affected by Government Shutdown

The continued U.S. government shutdown, now entering its fourth day, means that myriad services for consumers remain at a standstill.

The Small Business Administration (SBA), the Federal Trade Commission (FTC), and the Department of Education are among the agencies closed or partially shut down because of the congressional gridlock.

These agencies are instrumental to students and educators, small-business owners seeking loans, and consumers encountering financial concerns involving business practices. All these individuals may experience delays in service and funding as they wait for the impasse to end.

Government records show about 800,000 workers — or 40 percent of the nation’s more than 2 million federal employees — are still furloughed. The shutdown started after the U.S. House of Representatives attempted to halt Obamacare. That led to Democrats and Republicans in Congress failing to reach a compromise on how to fund the U.S. government.

But things can get much worse: The nation is closer to facing a catastrophic default as the $16.7 trillion debt limit creeps nearer to its Oct. 17 deadline. Default would raise the nation’s borrowing costs, meaning pricier mortgages, car loans and corporate borrowing costs. It also could delay Social Security checks, military pay and doctor payments.

SBA Not Accepting Most New Loan Applications

The majority of SBA operations are frozen and the agency’s website states information and news relating to that agency may not be up to date. An SBA press release showed that 62 percent of the 3,500 employees would be furloughed.

There are a few exceptions to the suspension. The SBA’s Disaster Loan Program and the Inspector General operations, including disaster funded and investigatory activities, will stay uninterrupted.

All existing loans will continue to receive backing, but new loan applications will not be approved or processed, keeping some small-business owners and entrepreneurs from access to significant funding, such as 7(a) and 504 loan programs.

The SBA issued a statement on the matter, published by, “Due to the government shutdown, America’s 28 million small businesses will be unable to access an average of $96 million in capital supported by the U.S. Small Business Administration (SBA) per day.”

FTC Complaints on Hold, CFPB Remains Open

Consumers visiting the FTC website, a valuable resource for consumers seeking to understand rights and regulations preventing businesses from unfair or deceptive acts, are greeted by the message: “Unfortunately, the Federal Trade Commission is closed due to the government shutdown…We hope to be open soon.”

The homepage shows that consumers cannot file complaints or register for the Do Not Call list. Although consumers can request federal records as provided by the Freedom of Information Act, none of those petitions will be processed.

Meanwhile, the CFPB, an agency under the FTC, was spared from the government shutdown. The authority handles consumer complaints and takes measures to protect consumers from banks, credit unions, debt collectors and other institutions that may be involved in unethical and deceptive practices.

The agency remains open because it’s funded by tax payer money in the Federal Reserve, not Congress. However, that could change. U.S. House Republicans proposed a plan that would allow Congress to reduce funding for the CFPB, which could bar consumers from another government safeguard in the event of future federal shutdowns.

DOE Loans Are Safe for Now

More than 90 percent of the 4,225 workers at the U.S. Department of Education remain furloughed. If the shutdown continues, certain education grants, and disability and disadvantaged student programs will face limited funding.

Other federal aid programs, like Pell Grants and Federal Direct Loans, should continue with minimal impact, as these are part of permanent and multi-year funding. Since the shutdown happened after much of fall tuition was already processed, students were protected from any initial delay of federal aid operations.

But if the shutdown continues for at least four more days, the department expects to have difficulty conducting essential operations — processing FAFSA applications, managing federal grants and paying student loans — and will need to furlough more workers, according to a report by

Justin Draeger, president of the National Association of Student Financial Aid Administrators, told Inside Higher Ed brief government shutdown is “pretty minimal,” but warned that a prolonged impasse means “the ability of schools and the department to work on complex student or borrower issues would be a problem.”

Alanna Ritchie is a content writer for, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

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