Will the 2025 Government Shutdown Affect Your Student Loans? (The Truth)

Don't panic about student loan impacts from the government shutdown. While it affects borrowers, it's likely not as severe as you think, despite concerns about forgiveness, payment pauses, or FAFSA.

Here's the reality: Some things keep running like normal, while others grind to a halt. Your monthly payment? Still due.

That loan forgiveness application you submitted? Probably sitting in a digital waiting room. We're breaking down exactly what the shutdown means for your wallet and what you should do about it.

Key takeaways

• Your federal student loan payments are still due during the shutdown
• New loan disbursements and Pell Grants continue for now, but delays could happen
• Applications for income-driven repayment plans and Public Service Loan Forgiveness are stuck in limbo

Do I still have to pay my student loans during the shutdown?

Yes. Full stop.

Your loan servicer doesn't shut down just because Congress can't agree on a budget. These companies operate independently and continue normal operations:

• Processing payments
• Sending bills
• Reporting to credit bureaus
• Charging late fees for missed payments

What happens if you skip a payment:

TuitionHero Tip

Set up autopay if you haven't already. Even during government chaos, automated payments go through on time and often come with a 0.25% interest rate discount.

Will I still get my financial aid and student loans?

Probably, but there's a catch.

What continues:

• Pell Grant disbursements (for now)
• Federal Direct Student Loan disbursements (for now)
• Processing of aid already approved

What could happen if the shutdown drags on:

• Delays in new disbursements
• Reduced staff to process applications
• Funding running out as carryover money depletes

Current students shouldn't panic yet. If you're enrolled and your aid was already disbursed this semester, you're fine. Students trying to get aid for spring semester or new disbursements might hit some bumps if this stretches on for weeks.

TuitionHero Tip

Keep making your regular payments even if you're waiting on IDR or PSLF approval. Those payments will still count toward forgiveness once processing resumes, but only if you actually paid them.

What happens to loan forgiveness applications during a shutdown?

This is where things get messy.

On October 1, all new income-driven repayment applications and Public Service Loan Forgiveness certifications were suspended. More than 1 million borrowers are already stuck in a backlog waiting to enroll in an income-driven repayment plan.

What's frozen:

• New IDR plan enrollments (SAVE, IBR, PAYE, ICR)
• PSLF employment certifications
• PSLF forgiveness applications
• Processing of pending applications

What still works:

• Your qualifying payments count (if you keep paying)
• Time toward forgiveness continues accruing
• Your current payment plan stays in effect

If you were counting on getting into an IDR plan to lower your monthly payments, you're stuck paying your current amount until the government reopens.

TuitionHero Tip

If you're working toward PSLF, keep making payments so they count once processing resumes.

Can I get help from my loan servicer or the Department of Education?

During a government shutdown, expect limited help with your student loans.

What still works:

• Basic servicer phone support
• Simple questions (payment dates, balance inquiries)
• Regular billing and payment processing

What's frozen:

• Office of Consumer Education and Ombudsman (complaint resolution)
• Investigation of servicer errors
• Appeals and escalations
• Civil rights complaint investigations
• New federal grant issuance

Your loan servicer should still answer the phone for straightforward questions. But if you need someone to investigate an error, appeal a decision, or escalate a problem that your servicer won't fix, you're out of luck until the shutdown ends.

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What if I'm a federal employee who's furloughed?

If you're a federal worker who's been furloughed or working without pay, you have options, but you need to act fast.

• Step 1: Don't stop paying. Missing payments trashes your credit and kills PSLF eligibility.
• Step 2: Recertify your income. If you're not getting paid, your income is temporarily zero. You can recertify with your servicer to get your IDR payment recalculated, potentially dropping to $0.
• Step 3: Know the catch. With the current application backlog, getting recertified during a shutdown takes longer than usual. Start the process now.
• Step 4: Consider temporary relief. If you can't afford your current payment while waiting, ask your servicer about:
  • Forbearance (pauses payments, interest accrues)
  • Deferment (pauses payments, may pause interest on some loans)

TuitionHero Tip

If you get back pay once the government reopens (which federal employees usually do), don't go on a spending spree. Use it to build an emergency fund so you're better prepared if this happens again.

Are there any loan forgiveness programs working during the shutdown?

Surprisingly, yes, but with caveats.

Despite the government shutdown, the U.S. Department of Education is sending out notices to student loan borrowers that their debt will soon be canceled. Some borrowers are still getting forgiveness notices, particularly those who've been waiting in the queue for a while.

But there's a weird timing issue to be aware of. The American Rescue Plan Act of 2021 made student loan forgiveness tax-free at the federal level through the end of 2025.

If your loans get forgiven in 2026, you could get hit with a tax bill treating the forgiven amount as taxable income. The shutdown delays are pushing some forgiveness approvals closer to that deadline.

So while some forgiveness is still happening, it's slower, more unpredictable, and potentially more expensive depending on when your loans actually get discharged.

What should I do right now?

Here's your action plan:

1. Keep paying your loans. This isn't optional. Missing payments hurts only you, not Congress.
2. Don't apply for new programs during the shutdown. You can still submit applications for IDR plans or PSLF certification, but processing is frozen. Your paperwork will sit there until the government reopens.
3. Document everything. Keep records of:
   1. Pay stubs (or lack thereof if furloughed)
   2. Communication with your servicer
   3. Any forms you submit
   4. Payment confirmations
4. Check your loan servicer's website regularly. Some servicers post updates about shutdown-related processing delays.
5. Plan for delays. Anything requiring government approval will take longer than normal. Build buffer time into your financial planning.

What about FAFSA and future financial aid?

The FAFSA system keeps running because it's considered essential, but with limitations.

If you're filling out a FAFSA for the upcoming academic year, do it anyway. The system will accept your application and process it once the shutdown ends. But if your FAFSA has complications requiring Department of Education input, expect delays.

TuitionHero Tip

Submit your FAFSA as early as possible, even during a shutdown. Priority deadlines don't pause for political drama, and you don't want to miss out on state or school-based aid because you waited.

How long could this shutdown last?

Nobody knows, and that's part of what makes this so frustrating.

Government shutdowns can last anywhere from a few days to several weeks. The longest one in U.S. history ran for 35 days (December 2018 to January 2019). Every shutdown is different because it depends entirely on when Congress can agree on a funding bill.

What we do know is that the longer it lasts, the worse the backlog gets. Applications pile up, staffing problems compound, and borrowers get stuck in longer waiting periods for anything requiring Department of Education approval.

Will the government pay me back if I overpaid during the shutdown?

If you've been making payments while waiting for an IDR plan approval that would've lowered your payment amount, you might wonder if you'll get a refund for the difference.

The answer is: Maybe, but don't count on it.

Getting a refund for overpaying your loan depends on a few things: your specific situation, your loan servicer's rules, and how long the shutdown lasts.

Historically, to get your money back, you needed to keep good records and follow up, so if this applies to you, make sure to hold onto all your payment and communication records.

Once the shutdown ends and your IDR application gets processed, contact your servicer immediately to ask about refund options. They're not required to volunteer this information, so you have to advocate for yourself.

TuitionHero Tip

Use the shutdown period to research your options and gather documentation. That way, you're ready to move fast once things reopen.

What if my loan is in default?

If your loan is already in default, the shutdown might give you tiny breathing room.

What continues:

• Collections by private agencies
• Interest accrual
• Credit reporting

What's paused:

• Loan rehabilitation processing
• Default resolution programs
• Some wage garnishments and tax refund offsets (potentially delayed)

If you were trying to rehabilitate your loan or get out of default, those processes are on hold. But here's a silver lining: if the government were about to garnish your wages or withhold your tax refund, those actions might get delayed.

Why trust TuitionHero

At TuitionHero, we help you find the best private student loans by comparing top lenders and breaking down eligibility, interest rates, and repayment options. Whether you need additional funding beyond federal aid or a loan without a cosigner, we simplify the process. We also provide expert insights on refinancing, FAFSA assistance, scholarships, and student credit cards to support your financial success.

Frequently asked questions (FAQ)

Can the government forgive my loans during a shutdown?

Technically, yes, but it's slow and unpredictable. Some forgiveness notices are still going out, but new applications aren't being processed. If you've been waiting for forgiveness, you might still get approved, but don't expect it to happen quickly.

What if I can't afford my payment during the shutdown?

Contact your servicer immediately about deferment or forbearance. These options temporarily pause your payments, though interest usually keeps accruing. If you're a federal employee without pay, ask about recertifying your income for a lower IDR payment.

Will my credit score be affected if I can't pay during the shutdown?

Yes. The credit bureaus don't care why you missed a payment. If you don't pay, your servicer will report it as delinquent after 30 days, and your credit score will drop. Shutdowns don't create an exception to this rule.

Can I still refinance my federal loans during a shutdown?

Yes. Private lenders operate independently of the federal government, so refinancing is still an option. But be careful because refinancing federal loans into private loans means giving up federal protections like IDR plans, forbearance options, and forgiveness programs.

When will the backlog clear after the shutdown ends?

It depends on how long the shutdown lasts and how quickly the Department of Education can get staff back to work. After previous shutdowns, it took weeks or even months for processing times to return to normal. Expect delays even after funding resumes.

Final thoughts

Government shutdowns are frustrating, but most borrowers won't see dramatic changes day-to-day. Your payments are still due, your aid should still come through, and basic servicer help remains available. The biggest impact hits people waiting for applications to be processed or needing direct help from the Department of Education.

At TuitionHero, we're here to help you find the right repayment strategy, compare refinancing options, and understand your forgiveness eligibility, whether the government is open or closed. You've got options, and we'll help you figure out which ones work for your situation.

Source

• Government shutdown 2025: What to know on airports, travel, social security, student loans, military, SNAP and more
• Government shutdowns in the United States - Wikipedia
• Yes, you still have to pay your student loans during the government shutdown
• How the government shutdown will impact schools, student loans - ABC News