What a Government Shutdown Could Mean For You

funding bill

The House of Representatives and Senate passed a short-term funding bill on Friday to keep the government from shutting down — at least for another week.

The House voted 382-30 for the stopgap funding legislation, and the Senate passed it with a voice vote soon afterward. The bill gives lawmakers until May 5 to reach a bipartisan budget agreement. The final agreement would fund the government through the end of the 2017 fiscal year, which ends September 30.

The approval came just a day after Senate Democrats blocked a quick vote on the short-term bill. Democrats insisted on delaying a vote until Republicans agreed to leave provisions on abortion, financial regulations, and the environment off the table.

Despite the quick reversal by Democrats, the two sides remain at odds over what should belong in the final agreement. With just one week to compromise or face another stopgap funding need, the government still faces a shutdown.

What is a government shutdown?

A government shutdown happens when Congress fails to pass a bill funding government agencies and operations. The funding gap shuts down government activities deemed non-essential and its effects can trickle down to consumers’ wallets.

This isn’t Congress’ first rodeo either. Although you may remember the 2013 government shutdown, you might not know about the other 17 times the government has shut down.

Going as far back as the Ford administration, government shutdowns have tended to be short, with many lasting just a few days. But some have lasted two to three weeks, putting some consumers in a tough spot financially. Here’s how a government shutdown can affect you and what you can do to prepare.

What a government shutdown could mean for you

If the House and Senate don’t pass any kind of funding bill between now and May 5, here are a few things that could happen:

Some federal employees won’t get a paycheck

Employees working for federal agencies may be out of a job for a while if a shutdown happens. Workers considered vital will continue to work during the shutdown. They’ll also likely receive payment for the work once Congress passes a funding bill. But if you’re furloughed, there’s no guarantee you’ll receive back pay for the time you missed.

What you can do: Take stock of your financial situation and make sure you have enough funds set aside to keep you afloat in case you miss a paycheck or two. If you don’t, try to avoid short-term loans, as they can charge high interest rates and require quick repayment.

Instead, consider asking a family member or friend for a personal loan. You can also apply for a personal loan through your bank or take advantage a 0% APR promotion on a credit card.

It could ruin your travel plans

If you’ve already booked a flight to visit a national park or museum, or are heading overseas, you might need to change your plans. All national parks and museums operated and funded by the federal government will shut down without an approved funding bill.

Passport services could also be delayed. That’s because the Bureau of Consular Affairs has much of its staff working in federal offices. If you waited until the last minute before an international trip to apply for your passport, you might miss it.

What you can do: If you already have your days off from work and have paid for the trip, check to see if you booked refundable flights and hotel stays.

If so, you can get your money back and postpone the trip. If not, consider contacting the airline and hotel customer service centers to plead your case. There’s no guarantee, but it doesn’t hurt to ask.

It might delay your mortgage

Mortgage lenders understand the risks associated with approving mortgage loans. They leave no stone unturned when vetting your financial stability.

With a government shutdown, employees at the Internal Revenue Service and Social Security Administration may be furloughed. Without those agencies, lenders won’t have the proper paperwork to approve your loan.

What you can do: Whether you’re building or buying a home, double check with the seller to make sure there are no penalties for a delayed settlement. Some contracts may stipulate a daily fee if funding isn’t available. If there is a fee, check to see if the circumstances warrant an exception.

It could cause setbacks with your small business loan

The federal government operates the Small Business Administration (SBA), too. So any applications for federal small business loans will likely be on standby.

What you can do: If your capital needs aren’t immediate, your best bet is to wait. Chances are, your application will get picked up again in a week or two.

If you do have immediate expenses, though, consider applying for a small business loan or personal loan through a private lender. You can also think about applying for a small business credit card with an introductory 0% APR promotion.

Be prepared

Whether or not Congress approves a funding bill through the end of the current fiscal year is not something you can control. But if any of the byproducts of a government shutdown affect you personally, you can still be prepared.

Knowing what can happen and how to respond can make sure a shutdown — if one occurs — doesn’t cripple you financially.

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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2017, the one-month LIBOR rate is 1.23%. Variable interest rates range from 6.02% – 15.97% (6.02% – 15.97% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms and presence of a co-applicant. Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with Citizens Bank at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, Citizens Bank checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
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5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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