The Dome of the U.S. Capitol Constructing is seen in reflection on October 14, 2025 in Washington, DC.
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As the federal government shutdown stretches on, it is not straightforward for debtors to gauge what’s taking place with their student loan debt.
The U.S. Division of Schooling has been sending out forgiveness notices to some debtors, for instance, however a lawsuit associated to reimbursement plans and debt cancellation is on hold throughout the stalemate in Washington.
One factor that is not on pause: scholar mortgage funds. Throughout the federal government shutdown, borrowers nonetheless have to pay their month-to-month payments, in keeping with a Division of Schooling memo from late September.
With no finish to the stalemate in sight, this is what else federal scholar mortgage holders have to find out about what duties they will and may’t do associated to their debt.
“Do not panic,” stated Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps debtors navigate the reimbursement of their debt. “The overwhelming majority of actions associated to federal scholar loans proceed to be out there.”
Debtors can nonetheless do ‘just about every part’
The U.S. government shut down on Oct. 1, that means employees throughout federal companies are temporarily on unpaid leave, together with staffers on the Schooling Division.
Luckily for federal scholar mortgage debtors, most of their mortgage duties are dealt with by firms the federal government contracts. These student loan servicers, together with Nelnet and CRI, proceed to function.
“We’re probably not impacted for the time being,” stated Scott Buchanan, govt director of the Scholar Mortgage Servicing Alliance, a commerce group for federal scholar mortgage servicers.
For now, debtors can nonetheless do “just about every part,” Buchanan stated. They will apply for brand spanking new reimbursement plans, request present billing statements and discuss to customer support, he stated.
If you do not know which firm is managing your scholar loans on behalf of the Schooling Division, yow will discover out at Studentaid.gov.
Debtors can even submit mortgage forgiveness functions below applications just like the Public Service Mortgage Forgiveness program and the Total and Permanent Disability Discharge.
Getting mortgage cancellation authorised, nonetheless, is one other story.
The place debtors will really feel shutdown results
Whereas federal scholar mortgage debtors can apply for debt cancellation applications throughout the federal government shutdown, they will not see aid till companies reopen, stated Nancy Nierman, assistant director of the Schooling Debt Client Help Program in New York.
“Precise discharge will likely be delayed as that needs to be authorised by the Division of Schooling, which has furloughed or laid off most of its employees,” Nierman stated.
Delayed forgiveness might result in a tax invoice for debtors. The American Rescue Plan Act of 2021 made student loan forgiveness tax-free on the federal stage via the end of 2025. However President Donald Trump’s “huge stunning” tax-and-spending package didn’t prolong or make everlasting that broader provision, that means mortgage erasure could result in a invoice from the IRS come January.
Some scholar mortgage debtors had been already experiencing delays to their mortgage forgiveness functions below the Trump administration, even earlier than the shutdown.
The delays prompted the American Federation of Lecturers to bring a legal challenge in opposition to Trump officers in March, wherein it accused the Schooling Division of denying debtors their rights to the debt forgiveness alternatives mandated of their mortgage phrases.
That lawsuit is on maintain throughout the federal government shutdown.
