What student loan borrowers can and can’t do, as the government shutdown stretches on | Despite the government shutdown, student loan borrowers should be able to complete most necessary tasks with the company managing their debt.

student loan borrowers government shutdown impact

Student Loan Borrowers & Government Shutdowns: What You Need to Know

The ongoing uncertainty surrounding a potential government shutdown can leave many student loan borrowers feeling anxious. Will essential services halt? What happens to your repayment plans, deferments, or loan forgiveness applications? This article clarifies what student loan borrowers can and can’t do during a federal shutdown, ensuring you can navigate this period with confidence.

Understanding the Impact of a Government Shutdown on Student Loans

When the federal government faces a shutdown, non-essential services are typically suspended. However, the administration of federal student loans is generally considered essential. This means most core operations continue, but there can be some ripple effects and specific areas to watch.

Key Services That Remain Operational

Fortunately, the Department of Education and its contracted loan servicers are usually equipped to maintain operations during a shutdown. This means:

• Loan Servicing: Your loan servicer will likely continue to process payments, manage repayment plans, and provide customer support.
• Loan Disbursements: Federal student loan disbursements for ongoing academic terms should still occur.
• Repayment Plan Changes: Applying for or adjusting income-driven repayment plans should remain possible.
• Deferment and Forbearance Requests: Submitting requests for deferment or forbearance should also continue uninterrupted.

Potential Areas of Disruption

While core services remain, some aspects might experience delays or require extra attention:

1. New Loan Applications: Processing of new federal student loan applications might see slowdowns, especially if FAFSA processing is impacted.
2. Loan Forgiveness Programs: While applications might still be accepted, processing times for programs like Public Service Loan Forgiveness (PSLF) could be extended.
3. Discretionary Funding: Any new legislative initiatives or funding related to student loans that require congressional approval could be stalled.
4. Communication Delays: While servicers aim to maintain service, exceptionally high call volumes or staffing adjustments could lead to longer wait times for customer support.

What Student Loan Borrowers Can Do During a Shutdown

Despite potential minor disruptions, proactive steps can ensure you stay on track:

Maintain Your Payments and Communication

The most crucial action is to continue making your student loan payments as scheduled. If you have automatic payments set up, they should continue without interruption. If you’re making manual payments, ensure you do so on time.

Keep communication lines open with your loan servicer. If you anticipate any issues, reach out to them proactively. They are the best source of information regarding your specific loan status.

Stay Informed About Your Loan Status

Regularly log in to your loan servicer’s website to monitor your account. Check for any updates or changes to your repayment plan, balance, or interest accrual. This is especially important if you are enrolled in an income-driven repayment plan.

Plan for Potential Delays

If you have upcoming deadlines for loan forgiveness applications or other important processes, build in some buffer time. Understand that processing might take slightly longer than usual.

What Student Loan Borrowers Can’t Do (or Should Be Cautious About)

While most essential functions continue, there are a few things to be mindful of:

• Assume Everything is Normal: While most services are operational, it’s wise to double-check rather than assume.
• Rely Solely on Government Websites: If government agency websites experience downtime, rely on your loan servicer’s portal for the most immediate and accurate information about your loan.
• Stop Making Payments: This is the most critical point. Failure to make payments can lead to delinquency, default, and damage to your credit score.

Navigating Federal Shutdowns with Confidence

While government shutdowns can introduce uncertainty, the federal student loan system is designed to remain largely operational. By staying informed, continuing your payments, and communicating with your loan servicer, you can effectively manage your student loan obligations even during these periods. Remember to consult official resources and your loan servicer for the most up-to-date information.

Call to Action: Bookmark this page and share it with fellow borrowers. Stay prepared and informed for any government funding eventuality.

External Resources:

• Federal Student Aid
• Consumer Financial Protection Bureau (CFPB) Student Loans

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