New Bill Halts Student Loan Interest and Fees for Federal Workers During Government Shutdowns, Retroactive to October 2025

The new Halting Education Loan Payments during Federal Employment Disruptions Act—or the HELP FEDs Act—is a targeted piece of legislation designed to protect federal employees who also hold federal student loans. Simply put, if a government shutdown or similar funding lapse stops your federal paycheck, this bill ensures your student loans don’t punish you for it. It hits pause on late fees, penalties, and interest accrual on qualified education loans during that involuntary pay disruption. Crucially, the bill also mandates that any missed payments during that time cannot be reported as negative marks on your credit report, and the protections are applied retroactively to any pay disruption occurring on or after October 1, 2025.

The Shutdown Safety Net

For the federal worker juggling a mortgage, childcare, and student loan payments, a government shutdown is a financial nightmare. This bill addresses that directly. Section 3 guarantees that if you miss a payment on a federal student loan because your pay was involuntarily disrupted—meaning the government stopped paying you due to a funding lapse—you won’t incur late fees or penalties. Even better, your loan balance won’t grow because the bill stops interest from building up during the entire disruption period. Think of it as a mandatory, interest-free forbearance that kicks in automatically when the government closes its doors.

Protecting Your Credit Score

The most significant protection might be the shield around your credit score. If a federal employee is furloughed and can’t make a payment, Section 3 requires the Secretary of Education to coordinate with loan servicers and credit reporting agencies to ensure that missed payment doesn't become a black mark on your credit history. This is vital because a ruined credit score can affect everything from renting an apartment to getting a decent interest rate on a car loan. Furthermore, the bill makes this protection retroactive: if a federal employee had negative information reported due to a shutdown since October 1, 2025, the Department of Education must work to get that information removed from credit reports.

The Fine Print: What It Doesn’t Do

While this is a clear win for federal employees, it’s important to understand the limits. Section 5, the “Rule of construction,” is crystal clear: this Act does not wipe out your student debt. You still owe every dollar you borrowed. The bill only provides a temporary interest and penalty freeze during a specific, government-caused financial crisis. If you’re a student loan holder who is not a federal employee—say, you work for a contractor or in the private sector—and you face a financial emergency, this bill offers you no relief. The protections are narrowly tailored only to those defined as federal employees who suffer an “involuntary disruption of pay” tied to a government funding lapse.

Fast-Track Implementation

Getting this system up and running is a priority. Section 4 gives the Secretary of Education a tight 30-day window to team up with the Office of Personnel Management (OPM), the U.S. Courts, and congressional offices to issue the necessary rules and guidance. This rapid timeline is intended to ensure that loan servicers, credit bureaus, and employees know exactly how to implement the new rules right away. Given the number of agencies involved, hitting that 30-day deadline will be a significant administrative lift, but it shows the intent to provide immediate protection when the next shutdown looms.