How student-loan borrowers will be affected by the government shutdown

Student-loan borrowers are still required to make payments during a government shutdown.

ALEX WROBLEWSKI/AFP via Getty Images

The government shut down on October 1.
Student-loan borrowers are still required to make payments during a shutdown.
Negotiations on Trump’s student-loan repayment overhaul will also continue.

The government is shut down, but it doesn’t mean student-loan payments are.

The government ran out of money to pay its bills on October 1 after Democratic and Republican lawmakers failed to reach a funding agreement. This means that each federal agency’s shutdown contingency plans, which include furloughing thousands of federal employees, closing national parks, and delaying grant disbursements, are now being rolled out.

For the Department of Education, the shutdown will slow down the work of an already stripped-down agency. According to the department’s contingency plan, it will furlough 1,485 of its 1,700 employees, excluding the Federal Student Aid office. FSA will be staffed by just 115 employees during the shutdown.

Even with the minimal FSA staff, the department said it will continue to disburse student aid like federal student loans and Pell Grants, and student-loan borrowers are still required to make their payments during the shutdown. Since funds for student aid programs are provided through mandatory appropriations, the department said, those programs will continue for the 9.9 million students who depend on student aid.

“Other contracts needed to obligate and process payments, maintain systems necessary to disburse Pell Grants and student loan payments, and provide legal counsel to FSA and other offices have been prefunded and will continue,” the department said.

FSA employees who are working in areas not directly related to student aid disbursement will be furloughed.

In addition to student-loan repayment, the department will also continue to process FAFSA applications and disburse Title I funds to low-income school districts.

Student-loan repayment discussions continue

The government shut down in the middle of a week of negotiations on President Donald Trump’s plan to overhaul student-loan repayment. On Tuesday, Jeff Andrade — the department’s deputy assistant secretary for policy — told negotiators that the sessions will continue in the event of a shutdown.

“Failure to actively continue work towards promulgating these regulatory changes would substantially impair otherwise funded programs, like Pell Grants and direct loans, from implementing new statutory requirements by the statutory deadlines under the One Big Beautiful Bill Act,” Andrade said.

He’s referring to the tight timeline the department has to implement a major overhaul of student-loan repayment. Specifically, the “big beautiful” spending legislation called for eliminating existing income-driven repayment plans and replacing them with two options: a standard repayment plan and a new Repayment Assistance Plan.

The department intends to make those plans available to new borrowers by July 1, 2026.

It’s unclear how the department’s staffing will shape up over the duration of the shutdown. The Office of Management and Budget said in a memo to federal agencies last week that they should “consider” terminating employees working in programs that are inconsistent with Trump’s priorities.

It means that the Department of Education could face further cuts — the Supreme Court gave the department the green light to terminate 1,300 of its employees in July as part of the administration’s goal to dismantle the agency.

Read the original article on Business Insider

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