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

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Stacey MacPhetres College Coach

Written by Stacey MacPhetreson October 2nd, 2025

My education finance background includes working in financial aid administration at Emerson College and Elms College. In addition, I spent more than a decade working in education finance at JPMorgan Chase, where I was responsible for managing loans for both federal and private loan portfolios. Prior to joining College Coach, I served as a consultant in financial aid for Mount Holyoke College. I hold a bachelor’s degree in political science from Marist College and a master’s degree in political communication and marketing from Emerson College. I'm a member of the Massachusetts Association of Student Financial Aid Administrators.
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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. 

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