US government shutdown: Will the student loans be affected? Here's what we know
During the US government shutdown, students can still access loan servicers. Roughly 9.9 million students receive federal financial aid across around 5,400 colleges.
As the United States federal government shutdown began on Wednesday following a funding impasse between President Donald Trump and Democrats, the US Education Department has confirmed that several key functions will remain operational.
According to its shutdown contingency plan, federal financial aid, including Pell Grants and student loans, will continue to be distributed, and students must continue repaying loans.
The department oversees a $1.6 trillion federal student loan portfolio, supporting roughly 9.9 million students across around 5,400 colleges.
Roughly 9.9 million students receive federal financial aid across around 5,400 colleges, the department states.
Despite the shutdown, the department will keep processing the Free Application for Federal Student Aid (FAFSA), which plays a crucial role in how colleges and universities determine financial aid for new students. Most borrowers deal with loan servicers contracted by the department, not directly with FSA staff.
However, 632 out of 747 employees in the Office of Federal Student Aid are expected to be furloughed. The department did not specify which roles would be affected.
Additionally, some staff working on student loan policy changes, part of the Republican-backed “One Big Beautiful Bill”, will remain on duty to meet legally mandated deadlines.
According to Persis Yu, Deputy Executive Director and Managing Counsel at the Student Borrower Protection Center, the longer Washington takes to reach an agreement, the more issues are likely to emerge, USA Today reported.
‘Borrowers need service right now more than ever’
“This moment is actually really important in the student loan cycle because we are on the cusp of millions of borrowers defaulting on their student loans. Borrowers need service right now more than ever,” Yu stated.
As per the report, Betsy Mayotte, President and Founder of The Institute of Student Loan Advisors, said that if the shut down is brief, borrowers should still be able to contact their loan servicers and vendors with any questions, adding, “The only time it becomes questionable is if the shutdown were to last a very long time — weeks or months.”
Mayotte said, "Remember that most of the functionality is done by outside vendors, and they will continue at least for the foreseeable future," Mayotte said. She added, “If, for some reason, the shutdown goes on for a very long time, then start paying attention to the studentaid.gov website to see if anything changes.”
(With inputs from AP)