New Bill Halts Student Loan Payments for Feds During Shutdowns Lasting 14+ Days

This bill, officially the “Shutdown Student Loans for Feds Act,” establishes a safety net for federal employees and contractors who get caught in government shutdowns. Starting in fiscal year 2026, if a lapse in appropriations lasts 14 days or longer, the Secretary of Education must automatically suspend federal student loan payments for affected individuals. Crucially, interest will stop accruing during this suspension period, meaning your balance won't grow while your paycheck is on hold.

The Shutdown Safety Net for Student Loans

The core of the bill is providing immediate financial relief when the government runs out of money. If you are a federal employee—whether you’re furloughed or working without pay (deemed “excepted”)—you qualify as a “Covered Individual.” This relief also extends to contractors whose job duties support those federal employees. The key exclusion is if you received your normal basic pay during the shutdown, which is designed to exclude workers who are paid through different mechanisms or who get back pay immediately.

Progress Towards Forgiveness Continues

One of the biggest wins buried in the text is how the bill treats these suspended months for loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF). For every month your payment is suspended, the Secretary of Education must count that month as if you made a regular payment toward forgiveness. This means a shutdown won't sabotage your progress toward that 10-year mark. Furthermore, the Secretary must report these suspended periods to consumer reporting agencies as if you had made a regularly scheduled payment, ensuring your credit score doesn't take a hit because Congress couldn't pass a budget.

Refunds and Real-World Impact

For those who might panic and pay their student loan bill even during a shutdown, the bill allows you to request a refund for any payments made during a qualifying 14-day or longer lapse in appropriations, starting in fiscal year 2026. Think about the average federal worker—maybe a park ranger or an IRS analyst—who has a $400 student loan payment. Losing two weeks of pay, or facing the uncertainty of a long shutdown, makes that $400 impossible to manage. This bill essentially takes that payment off the table automatically, providing critical breathing room for rent, groceries, or utilities.

Administrative Headaches and Exclusions

While the relief is a clear benefit, implementation might be messy. The bill's definition of a “Covered Individual” includes contractors, which is good, but verifying which specific contractors are eligible could be an administrative nightmare for the Department of Education. Also, the exclusion of anyone who received “normal basic pay” during the lapse could create disputes, especially for employees who receive partial pay or who have complex compensation structures. Finally, the cost of this relief will be borne by the federal government (and taxpayers), as the government absorbs the administrative costs, the lost interest payments, and the administrative burden of processing refunds.