How the Federal Government Shutdown May Impact Federal Student Aid and Loan Repayment

OBBB update

As of October 1, 2025, the federal government has officially shut down due to a failure to reach a funding agreement. This development raises important questions for students and borrowers relying on federal financial aid and student loan services.

What You Need to Know

While many federal employees have been furloughed, key functions of the U.S. Department of Education will continue. However, due to reduced staffing, delays in processing and communication are likely. Here's how the shutdown may affect federal student aid and loan repayment:

Federal Student Aid

  • Disbursements Will Continue
    Federal Pell Grants, Federal Direct Student Loans, and other forms of aid will still be disbursed as scheduled.

  • FAFSA Remains Available
    The Free Application for Federal Student Aid (FAFSA) for both the 2025–26 and 2026–27 academic years is still open and being processed.

  • What You Should Do
    Families are strongly encouraged to submit FAFSA applications on time to meet upcoming deadlines, despite the shutdown.

Federal Student Loan Repayment

  • Payments Are Still Due
    Borrowers in active repayment must continue making payments. Interest will continue to accrue during the shutdown.

  • Applications Can Be Submitted, But Expect Delays
    You may still submit applications for:

  • Public Service Loan Forgiveness (PSLF)

  • Income-driven repayment plans

  • Loan consolidation

However, final approvals, PSLF buyback processing, and consolidation actions will be paused during the shutdown.

  • Recommended Actions for Borrowers

  • Track your repayment and forgiveness status closely.

  • Save documentation in case of future discrepancies.

  • Contact your federal loan servicer directly—servicer operations are not impacted by the shutdown.

Stay Informed

We are actively monitoring developments and will provide updates as the situation evolves. If you have questions or concerns, reach out to your loan servicer or financial aid office for guidance.

Stacey MacPhetres headshot
About the Author
Stacey MacPhetres
Senior Director, College Finance
Stacey MacPhetres is Senior Director of Education Finance at Bright Horizons, the nation's leading provider of educational advisory services to organizations and families. At Bright Horizons, Ms. MacPhetres oversees education finance and student loan coaching. Ms. MacPhetres' education finance background includes working in financial aid administration at Emerson College, Elms College and as a consultant at Mount Holyoke College. In addition, she worked as a vice president of education finance at JPMorgan Chase, where she was responsible for managing loans for both federal and private loan portfolios. MacPhetres holds a bachelor's degree in political science from Marist College and a master's degree in political communication and marketing from Emerson College. MacPhetres has been featured as an education finance and student loan expert in numerous news outlets, including Money, CNBC, NBC News and Associated Press (AP) News. She is a frequent guest on the podcast, "Getting In: A College Coach Conversation" and presenter at student loan and college finance industry conferences.
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