Student Loan Help During Government Shutdown: What You Need to Know

A U.S. federal government shutdown (when Congress fails to fund agencies) can leave many Americans wondering how it affects their finances – including student loans. The good news is that federal student loan repayments and servicing mostly continue even during a shutdown. The Department of Education’s contingency plan makes clear that “student loan borrowers will still be required to make payments on their outstanding student debt. Most core systems and servicers operate via private contractors, so billing, deferment/forbearance processing, and customer service centers remain open. However, some processes that need Department of Education (ED) staff – notably loan forgiveness approvals and major debt relief programs – are paused until funding resumes.

Read on for a complete breakdown of what happens to federal student loans during a shutdown, what relief options are available, how costs and timelines may change, comparisons with normal times (and with private loans), and practical tips for borrowers. We also include a helpful FAQ and final takeaways so American families can confidently navigate their student loans through this disruption.

What Is a Government Shutdown?

A government shutdown occurs when Congress cannot pass (or the President does not sign) appropriations legislation to fund federal agencies. Nonessential federal employees are furloughed (placed on temporary unpaid leave), and some agency operations halt. Essential services (e.g. national defense, Social Security, emergency medical care) continue, but many “discretionary” programs pause. In education, for example, civil rights investigations and new grant funding are put on hold.

For student loans, however, most day-to-day operations are deemed “essential” or are funded through other sources. According to the ED’s official lapse-contingency plan, “the Department will continue to disburse student aid such as Pell Grants and Federal Direct Student loans, and student loan borrowers will still be required to make payments on their outstanding student debt. The plan also confirms that FAFSA processing, Pell Grant disbursement, and loan servicing will continue under existing budget authority. In short, while many federal employees go offline, the student loan machine keeps running, largely via prepaid contracts and outside servicers.

Federal Student Loan Basics

The U.S. Department of Education (DOE) manages roughly a $1.6 trillion portfolio of federal student loans (Direct Loans and Federal Family Education Loans). Federal student aid includes Pell Grants, Stafford Loans, PLUS Loans, Income-Driven Repayment (IDR) plans, and forgiveness programs like Public Service Loan Forgiveness (PSLF). Importantly, most loan servicing tasks are handled by private companies (Nelnet, MOHELA, Aidvantage, etc.), not DOE employees. Thus, even if ED staff are furloughed, these contractors remain on the job.

In normal times, borrowers log in at StudentAid.gov or contact their loan servicer to manage accounts, make payments, request forbearance, or apply for forgiveness. During a shutdown, those channels largely stay open. The Federal Student Aid (FSA) call center (1-800-4-FED-AID) and loan servicer hotlines continue answering questions. The DOE’s Common Origination and Disbursement (COD) and National Student Loan Data System (NSLDS) systems also stay up for processing loans. In practice, this means borrowers can still log into their accounts, pay bills, change repayment plans, and submit applications as usual – it’s just the back-office approvals that slow down.

How a Shutdown Affects Student Loans

Payments and Servicing Continue

• Repayments Are Still Due. Borrowers must continue making scheduled payments. As the AP reports, “student loan borrowers remain responsible for making their monthly payments” – “repayments are not paused, even as much of the department’s workforce is furloughed. In other words, the shutdown does not give you a free pass; unless you request a payment pause (forbearance/deferment), your loans will continue to accrue interest and expect payment on the normal due date.
• Loan Servicers Are Open. Customer service centers at servicers (the companies handling your loan) remain operational. According to the Student Loan Servicing Alliance, contractors who run most borrower-facing offices report they are “not really impacted at the moment. You can still call your servicer (Nelnet, MOHELA, Granite State/Aidvantage, FedLoan/PHEAA, etc.) to ask questions or manage your loan. These servicers will continue billing, posting payments, answering calls, and processing standard requests (like applying for a different repayment plan or printing a statement) just as they do when the government is open.
• Aid Disbursements Continue. If you are a student expecting federal aid (grants or loans) for the new school year or semester, those payments still go out. Pell Grants and Federal Direct Loan disbursements follow the existing schedule because those programs have permanent or carryover funding. In fact, ED’s shutdown plan explicitly names Pell and Direct Loans as continuing: “Permanent and multi-year appropriations will be used to continue some key operations (such as processing Free Applications for Federal Student Aid, disbursing Pell Grants and Direct Loans, and servicing Federal student loans). Practically, this means that if your financial aid was approved before the shutdown, your school should still receive the funds on time, and your loan money should still be available for you.
• FAFSA and New Aid Applications. The Free Application for Federal Student Aid (FAFSA) website remains up and running. Students can still submit FAFSA forms, and colleges can retrieve the information. The ED plan calls out processing FAFSA data as an “exempt” activity, funded by existing budgets. In short, you can still apply for new federal student aid via FAFSA; any enrollment or financial verification you need to do should still happen (though you may notice communication with ED might be slower).
• Contact Points Open. The DOE’s main aid hotline (1-800-433-3243) and each loan servicer’s own helpline are functioning. College Aid Services notes that 1-800-4-FED-AID remains open and college financial aid offices have been instructed to reassure students that processing is ongoing. If you don’t know your servicer, you can still use StudentAid.gov’s lookup tool or call the FSA support number to find out.

What Slows or Pauses

• Loan Forgiveness and Discharges. Any process that requires an ED employee to make a final determination will be delayed. For example, Public Service Loan Forgiveness (PSLF) crediting and many income-driven forgiveness requests are on hold during the shutdown. You can still file the paperwork (the applications are still accepted), but they will not be approved or disbursed until DOE reopens. As one expert put it, “the vast majority of actions related to federal student loans continue… However, borrowers seeking debt cancellation should be aware that approvals will only resume once the Department of Education is fully operational. In plain terms, you can apply or check on forgiveness, but don’t expect a final OK or loan discharge until government funding is restored.
• Legal Actions and Appeals. Any ongoing litigation or administrative appeals (like borrower defense to repayment or formal disputes handled by the Ombudsman) are effectively paused. The Times of India report notes “legal actions related to student debt are also paused” during the shutdown. Similarly, if you had a court case or a formal challenge (e.g. PSLF lawsuit, loan dispute) in progress, expect delays.
• Refunds and Discharges. If you were expecting a disbursement of a refund (say, an overpayment refund to your bank account) or a completed closed-school or disability discharge, those may be delayed. Federal guidance warns that “processing of refunds and discharges could be delayed” until ED staff return. In practice, this means a payment or an email you were waiting for might take longer to arrive.
• New Rulemaking or Changes. DOE staff involved in crafting or finalizing new rules (such as changes from the latest education bills) are mostly furloughed. So if Congress passed new loan policy that requires ED to write regs, that work will not move forward. Similarly, training sessions, webinars, and regular updates (for example, the FSA Knowledge Center updates) are suspended.

In short, “virtually everything that borrowers regularly need to do with their student loans – paying bills, enrolling in plans, asking questions – can still be done via the usual channels.” What changes is the back-end speed on things that absolutely require ED action.

What Relief or Help Is Available Now

Although the shutdown itself does not trigger any new federal relief (no automatic payment freeze or interest waiver is in place just because of the shutdown), borrowers can still use the usual federal programs and options to manage payments:

• Regular Forbearance/Deferment. If you are temporarily unable to pay (for example, due to a furlough or financial hardship), you can request a forbearance or deferment from your servicer. Both options will pause your payments, though interest will keep accruing (by law, interest always accrues during forbearance). The key point is that the process to request these remains unchanged. Contact your servicer (you can find their phone number on StudentAid.gov) to apply. In fact, the shutdown contingency guidance explicitly notes that “requesting a deferment or forbearance to pause payments on your loans” is something you can do — loan servicers remain open to handle these requests.
• Income-Driven Repayment (IDR) Plans. If your income has fallen, consider switching to or recertifying an IDR plan like IBR, PAYE, or REPAYE, which ties your payment to your earnings. Applying for or changing an IDR plan can still be done online or over the phone with your servicer. These plans can lower monthly payments (sometimes to $0) and count time toward eventual forgiveness. The servicers will process new IDR plans as usual, although formal approvals (for example, sending your information to the IRS) should still work since StudentAid.gov and COD remain operational.
• Public Service Loan Forgiveness (PSLF) and Loan Forgiveness Programs. You may continue to submit your employer certification forms and PSLF applications online. However, final forgiveness crediting will be on hold until after the shutdown. Likewise, other discharge programs (e.g. Total/Perma­nent Disability (TPD) discharge, closed-school discharge, borrower-defense discharge) can be applied for, but approvals will wait for ED staff. The upside is that once the shutdown ends, your application will just pick up from where it left off. Keep proof of any employment or disability documentation ready so you can re-submit quickly later if needed.
• Financial Aid and New Loans. High school seniors or college freshmen worried about federal aid for the upcoming year should proceed as normal: complete your FAFSA and work with your financial aid office. Loans or grants already awarded should still be disbursed. Note that if you need a new student loan (like a Direct PLUS Loan for parents or grad PLUS for students), you can still apply, but a small delay in processing is possible. If you encounter any technical issues on StudentAid.gov, document them and try again, as advice from financial aid experts suggests.
• Contact Points for Help. Everyone, regardless of loan status, should keep lines of communication open. You can always log into StudentAid.gov to view your loan balances, upcoming payments, and servicer information. If you have questions, you can call 1-800-433-3243 (Federal Student Aid Information Center) or your loan servicer’s number. These help centers are fully staffed and will answer shutdown-related queries like any other day.
• Scams Warning. Be on the lookout for misinformation. For example, rumors of an automatic payment pause or mass loan cancellation just because of a shutdown are false unless authorized by Congress or law. Only official announcements (from DOE, Congress, or trusted news) should guide you.

Importantly, the normal tools for hardship relief remain available: you can always consolidate loans, enroll in public service programs, or refinance (see below). There is no special “shutdown forgiveness,” but there is also no sudden loss of borrower benefits.

Costs, Interest and Repayment Timelines

Because the shutdown does not come with any new law pausing interest, interest on your federal loans keeps accruing exactly as it would in normal times. If you make all payments on schedule, your payoff schedule will stay on track. If you choose forbearance or deferment, know that unpaid interest is capitalized, which means it will be added to your principal when the pause ends, and you’ll owe interest on a larger amount. The DOE help pages emphasize that “interest accrues during a forbearance” (i.e. you still pay for the extra quiet period). In practice, that means the longer any payment pause or delay lasts, the more interest you’ll owe over the life of the loan.

Similarly, missed or late payments can incur fees and hurt credit, so you should try to keep payments current if possible. If you can afford to pay at least a minimal amount (even if you need short-term forbearance), you’ll save on interest.

One specific cost risk is tax-related: under the American Rescue Plan Act of 2021, forgiven loan amounts have been tax-free through Dec. 31, 2025. If your loan forgiveness is delayed into 2026, then that provision expires and the forgiven amount could become taxable income for that year. Experts warn this could happen if a shutdown pushes discharges past the deadline. In other words, delayed forgiveness might carry a tax bill if it slips past 2025. This is a caveat of the current law, not caused by the shutdown, but the shutdown is one factor that might delay approvals.

Repayment timelines generally do not change. If you continue on your current plan, you’ll still take (for example) 10 years to finish, 20-25 years on IDR, or 10 years on PSLF. One caveat: consolidating a loan resets the “clock” for forgiveness and repayment terms. If you planned to consolidate (for example, to move from Income-Based to SAVE), that can still be done but ED’s consolidation system is processing as normal. Just be aware it could shift your repayment timeline if you are mid-course.

Finally, federal loans still carry lower interest rates and richer protections than most private loans. Right now there is no special shutdown-related interest subsidy, so compare your existing rate to any refinancing offers carefully. For borrowers considering refinancing into a private loan (because they worry about forgiveness delays or need a lower rate), remember you would lose federal benefits (like IDR and PSLF) if you leave the federal system.

Pros and Cons of Available Relief (with Caveats)

Federal Student Loan Relief Options:

• Forbearance/Deferment – Pros: Immediately pauses payments, which can relieve short-term financial stress (e.g. furloughed or sick borrowers). It is easy to apply for and keep. Cons: Interest accrues on all loans (since no subsidy), so your debt grows. Does not count toward PSLF or IDR forgiveness time. In a shutdown context, these requests are still processed normally, but only do it if you truly need it, since it can cost you in interest.
• Income-Driven Plans (IDR) – Pros: Payment may drop (possibly to $0) if income is low, and each payment counts toward future forgiveness. You can switch plans or recertify even during shutdown. Cons: You may end up paying more interest over time, and any forgiveness amount (remaining after 20–25 years) could be taxable if beyond 2025. Administration of IDR is backed up (there’s already a backlog of applications), and a shutdown can slow approvals, but you can at least submit your paperwork now.
• Public Service Loan Forgiveness (PSLF) – Pros: Forgives remaining debt after 120 qualifying payments. It’s still a top benefit if you work for government/nonprofit. Cons: Currently on hold – you can apply or recertify, but actual crediting of months and final discharge will wait. The risk: if your forgiveness is delayed into 2026, you could owe taxes on that amount. Also, if you consolidate a loan during a shutdown, you reset the PSLF count (so avoid unnecessary consolidation).
• Refinancing (Private Loan) – Pros: Possible access to lower interest rates or different terms; monthly payment might be smaller if you get a good offer. Cons: It locks you out of federal protections. During a shutdown, refinancing is entirely a private matter (shutout unaffected), but it’s usually advisable only if you have stable income and don’t need federal programs. Many experts caution that refinancing while out of work is risky.
• On-Time Payments & AutoPay – Pros: Even during a shutdown, continuing automatic payments earns you a 0.25% interest rate reduction (by rule). This helps reduce interest costs. Cons: You must have the funds in your bank account. If your job is secure, staying on autopay is one of the easiest ways to save money.
• Borrower Coaching and Counseling: Nonprofits like The Institute of Student Loan Advisors (TISLA) offer free advice. Their president, Betsy Mayotte, advises borrowers “don’t panic” – the system is designed to run continuously. The Institute of Student Loan Advisers maintains resources and a hotline (tiѕla.org) for borrower guidance, though their staff may be furloughed as well. Still, reputable student-loan advocates can help clarify steps.
• State or Employer Programs: Remember some states or employers have their own aid programs (loan assistance for lawyers, doctors, teachers). These continue unaffected by federal funding. If you were counting on a state grant or an employer’s matching program, contact those offices directly to confirm. (They rely on state or corporate budgets, not Congress.)

Each relief option has trade-offs. For example, while forbearance buys time, it pushes costs into the future. Forgiveness programs offer freedom from debt, but shutdown delays can mean longer wait and possibly taxes. Overall, continue repaying as you were, but use flexibility (forbearance, IDR, etc.) only if you need to – and know that these tools are still accessible right now.

Borrower Experiences and Examples

It can help to see how hypothetical borrowers might navigate this. Consider these scenarios:

• Teacher in PSLF: Alice has been on track for Public Service Loan Forgiveness. She has filed annual employment certifications every October (via WGU or FedLoan/Aidvantage). Normally, she’d expect final forgiveness in 2026. With the shutdown, she can still file this year’s certification online and continue her payments. However, she knows that her servicer won’t receive final credit until DOE reopens. In the meantime, she continues payments to avoid any gap. Betsy Mayotte’s advice to her: “Don’t panic – your paperwork is in the queue. Just keep making payments and trust that your PSLF path will resume.”
• Recent Grad Needing IDR: Jamal recently graduated and got a job, but income is low. He switched from standard to an IDR plan via the servicer’s website. Under the shutdown, his request is logged by the contractor (Nelnet/MOHELA) and processed using pre-funded systems. His monthly payment dropped accordingly. He had been worried when news hit about the shutdown, but his servicer assured him that these plan changes go through. If his application were to need any ED approval, it would wait, but he likely got the lower payment quickly.
• Furloughed Federal Employee: Maria’s spouse works for a nonessential federal department and was furloughed. As a result, their household income dropped 60%. They decide to apply for a short-term forbearance on Maria’s remaining student loans. Maria calls her servicer and requests forbearance citing temporary hardship. The servicer grants a 3-month forbearance. Interest continues accruing (as disclosed), but this gives them breathing room without penalty. When Maria’s spouse returns to work, they plan to resume payments (or switch to IDR if income stayed low).
• Undergraduate Applying for Aid: Kevin is a college freshman in 2025. The shutdown happened right before his semester starts. He’s worried whether his promised grant and loan will arrive. In reality, Kevin’s school received its aid funds last spring, so his classes go on. Kevin’s Pell Grant and unsubsidized Direct Loan funds disbursed normally from the school’s account. StudentAid.gov is still online, so he can check his aid status. If there’s any glitch (say a missing check), the financial aid office will note that FSA systems should still issue funds as scheduled. They advise him to track his bank deposit but expect no problem.
• Borrower Seeking Forgiveness: Jenna has been trying to qualify for a Total and Permanent Disability (TPD) discharge of her loans. She submitted her forms in early September. With the shutdown, Jenna’s paperwork sits at the ED office of disability adjudication (which is furloughed). She calls the Disability Servicer line; they say they’re not processing new TPD cases until reopening. Jenna keeps paying her loans to avoid default, understanding that her discharge will only proceed once staff return. While disappointed, she at least has clarity that her application is filed and waiting.

These examples show that each borrower’s situation differs, but the common thread is: plans and payments mostly proceed, but expect a waiting period for official approvals. By knowing what is active vs. on pause, borrowers can make practical decisions (e.g. apply now, file documentation, but be patient on the outcome).

Shutdown vs. Normal Times & vs. Private Loans

Shutdown vs Normal (All Federal Loans)

In normal times, ED staff would review and approve things quickly. During a shutdown, that final step is the bottleneck. For example, before the shutdown, a PSLF application might take a few months to process; with furloughs it could take much longer. Similarly, any ED-directed counseling or ombudsman help is not available. The trade-off is temporary: once funding is restored, DOE will likely work through the backlog (though it may take time).

Day-to-day borrower life, however, feels almost the same as before. Your servicer will still accept payments, process extra payments toward principal, and advise on repayment options. The NASFAA and other experts emphasize that “the shutdown will have a minimal impact on students, borrowers… and explained that the majority of FSA’s processors, contact centers, and websites remain operational. In practice, this means the “core servicing functions” (payments, billing, plan changes) are largely uninterrupted. Compared to normal times, the only real change for many borrowers is slower turnaround on forgiveness/discharge and more silence from DOE itself.

All normal federal repayment programs (Standard, Graduated, Extended, IDR) remain available. However, Congress has not instituted any new automatic payment freeze like the CARES Act did in 2020; so unlike the COVID pause, there is no temporary 0% interest or suspension. Borrowers should proceed with paying as usual unless they choose to request deferment/forbearance.

Federal vs. Private Student Loans

It’s worth contrasting federal and private student loans. Private loans are entirely unaffected by a federal shutdown because private lenders and banks operate independently of federal appropriations. If you have a private student loan (e.g. from Sallie Mae, Wells Fargo, or a state agency), that lender will expect payments and impose interest as normal. They are not bound by DOE rules or any federal shutdown plan. In fact, many private lenders do allow their own forbearance or refinancing options, but those would be at the discretion of the lender (and they may also impose interest).

For federal loans, you have special protections and programs that private loans lack: income-driven plans, federal forbearance rules, PSLF, and so on. During a shutdown, federal loans still enjoy these features (at least in principle), whereas private loans don’t. In other words, if you have federal loans, you can pause via official forbearance with government-sanctioned rules; a private loan might not offer such flexibility. But the catch is that the government’s forgiveness programs have slowed. So private loans are “business-as-usual,” while federal loans have a bit more uncertainty on the forgiveness front. It’s a trade-off: federal loans bring more possible benefits (and also more bureaucracy), whereas private loans are simpler but less forgiving.

In any case, if you do have private student loans, you should treat them according to your contract. Contact your private lender if you face hardship; many offer limited programs. Private loans will not pause automatically due to the shutdown, nor will they qualify for federal forgiveness.

How to Manage Your Federal Student Loans Now

1. Log In to StudentAid.gov. Create or use your FSA ID to sign in. There you can see all your federal loans in one place, check balances, due dates, and who your servicer is. (If you forget which servicer handles a loan, this site tells you.) Make sure your contact info is up to date. During a shutdown, logins still work and your information is accurate because the database systems remain active.
2. Keep Paying if Possible. Unless you absolutely cannot, keep making your monthly payments. AutoPay (0.25% discount) is still in effect, and staying current avoids late fees and credit hits. If your paycheck arrives normally, set it up or check it out.
3. Contact Your Loan Servicer with Any Changes. If your income or situation changes, call your servicer. You can apply for a different repayment plan, switch to IDR, or set up an income-based plan over the phone or online. These requests will be processed by the servicer’s systems, so shutdown won’t stop you from changing your plan. They will take effect according to normal processing rules.
4. Submit Forgiveness/Discharge Paperwork Now. If you qualify for PSLF, TPD, or other discharges, go ahead and submit the required forms. Even though approval is on hold, it’s best to have your application on file. Keep copies of everything you submit. When DOE reopens, your paperwork will be in the queue. For PSLF, continue submitting annual certifications each October (as usual).
5. Budget for Ongoing Costs. Remember interest is accruing. You might see your loan balance tick up slightly each month. If this worries you, pay a little extra toward interest or principal each payment if you can. If you can afford only a reduced payment, request that your servicer apply it in a way you prefer (some allow paying interest only to minimize growth).
6. Plan for Possible Delays. If you were expecting a refund or new loan disbursement, give it an extra few business days before panicking. Likewise, if you apply for an IDR plan or consolidation, check back in a few weeks. Use your loan portal or servicer website to monitor status. If something seems stuck beyond a reasonable time, contact the servicer and note that any issues will be resolved after the shutdown. You don’t need a special code or process—just keep it on record.
7. File Your FAFSA Early. If you haven’t already filed FAFSA for 2025–2026, do it soon. The Department has indicated processing is continuing. Filing early helps lock in your aid even if some agencies are slower in updates. If a glitch occurs, file anyway and then notify your state or school financial aid office (they can often work around minor delays).
8. Stay Informed and Calm. Follow official sources for updates (FSA website, DOE social media, credible news). Scaremongering on social media can spread confusion. Remember: the shutdown is temporary. The contingency plan is in place exactly to keep key programs running.
9. Document Everything. If you try to do something (e.g. submit a form or reach support) and it fails because of a system issue, save screenshots or note the date/time. In rare cases, such documentation can help if someone later claims you missed a deadline due to the outage.

Frequently Asked Questions

Key Takeaways

• Stay the course: Student loan payments and basic servicing continue during a shutdown. Don’t stop paying or skip steps due to uncertainty.
• Use your rights: If you need relief, you can still request forbearance, change repayment plans, or file for forgiveness just as before. Servicers will process these requests.
• Plan for delays: Expect slower turnaround on any DOE-handled decisions (forgiveness, discharge, audits). Submit paperwork now and be patient; approvals will resume later.
• Watch costs: Interest keeps accruing. Forbearance eases today’s cash flow but costs more later. Continue autopay for a discount, and avoid default at all costs.
• Stay informed: Follow official sources like StudentAid.gov, credible news, and notify yourself via your servicer. Ask questions if unsure, but be wary of panicky rumors online.
• Focus on budgeting: Build a cushion if you can (e.g. reduce expenses, pick up gig work) to cover any income hiccup. An emergency fund will help you weather the shutdown without missing loan payments.

For most borrowers, nothing dramatically changes except processing speed. Government and student loan experts consistently advise: “Don’t panic. Continue to pay or use your repayment options, and trust that the system will catch up when it reopens. By staying informed and proactive, American families can manage through this shutdown with minimal impact on their student loan strategy.

Sources: Official Department of Education guidance and contingency plansed.goved.gov; Federal Student Aid announcementsnasfaa.orgnasfaa.org; media reports from CNBC/Times of Indiatimesofindia.indiatimes.comtimesofindia.indiatimes.com; advice from loan experts and financial institutionsstudentloanplanner.comcollegeaidservices.net.