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Will student loan payments resume if there is a government shutdown?

Americans with outstanding student loan debt are set to resume payments 1 October, the same day that the US government is likely to shutdown.

What does a government shutdown mean for student loan borrowers?

While the White House has been making efforts to lighten the burden of student loan debt through new programs like the SAVE repayment program others hit roadblocks. Millions of borrowers who had hoped to take advantage of a program to forgive up to $20,000 of federal student loan debt had those dreams dashed when the Supreme Court decided the basis upon which the executive order was issued was not valid.

The Biden administration announced prior to that decision that federal student loan repayments would be begin again starting 1 October after reaching an agreement with Republican leaders in the House. Interest on loans began to accrue again starting 1 September, like repayments it had been frozen since March 2020.

However, many are wondering now that a government shutdown looms and is looking highly likely to happen, also on 1 October, what does that mean for student loan repayments?

Will student loan payments resume if there is a government shutdown?

Quite simply, yes. While the Education Department’s contingency plan in the event of a government shutdown stipulates that over 90 percent of its total staff would be furloughed during a lapse in appropriations it will be the loan servicers that will be collecting the debts.

However, a shutdown could cause headaches as the plan from 2021 was created when no interest was accruing on student loan debt. The Department of Education says in the contingency plan that servicing federal loans could continue, but only for a “very limited time” as well operations could experience “some level of disruption.”

The disbursement of Pell Grants and Federal Direct Student loans during a lapse could also be affected. The agency says that it “would pause most of its grantmaking activities, including the development of grant announcements, review of grant applications, and awarding of grant funds.”

What should student loan borrowers do to prepare for loan repayments?

Borrowers should have already received a letter telling them when their first payment will be due as well as how much they have to pay. If you haven’t received that information you can contact your student loan servicer to find out what you will have to pay. As well, contacting your loan servicer to check details are up to date is also important. You can find out your loan servicer by logging into StudentAid.gov or calling the Federal Student Aid Information Center at 1-800-433-3243.