Automatic Student Loan Freeze for Federal Workers Kicks In After 14-Day Shutdowns Starting FY2026

The Shutdown Student Loans for Feds Act is straightforward: if a government agency has a lapse in appropriations—a shutdown—that lasts at least 14 days, federal employees and essential contractors who aren't getting paid get an automatic break on their federal student loans. Starting in fiscal year 2026, the Secretary of Education must suspend all required loan payments for these “covered individuals.” Crucially, during this suspension, no interest will accrue on the loans, and every suspended month will still count as a successfully made payment toward any existing loan forgiveness program, such as Public Service Loan Forgiveness (PSLF). If you’re a covered individual and you managed to make a payment during a qualifying shutdown, the bill also allows you to request a refund.

The Shutdown Safety Net

For anyone who has ever sweated through a government shutdown, the financial crunch is real. You’re expected to maintain your financial obligations—mortgage, car payment, student loans—even though your paycheck has been put on ice. This bill provides a direct fix for that student loan stress. The definition of a “Covered Individual” is key: it includes federal employees, whether they were furloughed or working without pay, and contractors whose job supports those employees, provided they didn’t receive their normal pay during the lapse. If you’re a federal employee with a student loan, this means you don’t have to call your loan servicer, file for forbearance, or worry about missing a payment and damaging your credit score when the government hits the brakes.

Credit Score Protection and Forgiveness Credit

One of the most valuable provisions in this Act is how it handles credit reporting and loan forgiveness. The bill mandates that the Secretary of Education must report these suspended payments to consumer reporting agencies as if the covered individual had made a regularly scheduled payment. This protects the borrower’s credit history from being negatively impacted by a shutdown they didn't cause. Even better, for those grinding toward PSLF or other forgiveness programs, this time won't be wasted. Every month of suspended payment counts toward the required number of payments for forgiveness, ensuring that a political stalemate doesn't derail a decade of public service commitment. Think of the peace of mind for a Department of Veterans Affairs nurse or a National Park Service ranger who is 90 payments into their 120-payment PSLF journey—a shutdown won't cost them a month of progress.

Practical Rollout and Administrative Load

While this is a clear win for federal workers, it does create some administrative complexity. The Department of Education will need to coordinate with the Office of Personnel Management (OPM) to accurately identify who qualifies as a “Covered Individual” for each shutdown period, which must last at least 14 days and occur in FY2026 or later. There’s also the potential for increased administrative workload at the Department of Education to process the required refunds for payments made during qualifying periods, especially if multiple shutdowns occur. However, the bill’s clarity—low vagueness—on the 14-day trigger and the automatic nature of the relief should minimize confusion for the borrower. For the average federal worker, the message is simple: if the government shuts down for two weeks or more, your student loan payment is automatically paused, interest-free, and your credit is safe.