A government shutdown won't stop the student-loan payment restart — but an extended one could jeopardize resources for borrowers who need help
The government will shut down after September 30 if Congress doesn't agree on a budget by then.
A shutdown would occur the same day student-loan payments resume.
The Education Department said resources for borrowers will be available the first few weeks of a shutdown.
President Joe Biden's Education Department is clear: government shutdown or not, student-loan payment are resuming on October 1.
The US is under two days away from a government shutdown if Congress cannot reach a funding agreement by then. Conservative lawmakers in the House have been pushing back against any bill that would not include their demands for steep spending cuts. While bipartisan lawmakers in the Senate have been seeking to find a solution, the clock continues to tick.
A shutdown could also happen at a critical time for millions of student-loan borrowers. After an over three-year pause, federal bills will start becoming due in October, a month after interest started to accrue again on borrowers' balances. However, amid calls from some Democratic lawmakers and advocates to pause payments in the event of a shutdown, the Education Department confirmed payments are still set to resume.
"Congress mandated a return to repayment as part of the budget deal over the course of the summer, and so even if House Republicans forced a shutdown of the government, we still are required to resume collecting student loans this month," an administration official told reporters on a Friday press call.
The official was referring to the bill to raise the debt ceiling Biden signed into law at the end of June that codified the end of the student-loan payment pause. The official noted, though, that resources will still be available for borrowers in the first few weeks of the shutdown, including student-loan servicer call centers and information on the Federal Student Aid website, like the loan simulator.
The 12-month "on-ramp" period for borrowers, during which missed payments will not be reported to credit agencies, will also still be in effect during a shutdown.
"However, a prolonged shutdown lasting more than a few weeks could substantially disrupt the return to repayment effort and long-term servicing support for borrowers," the official said.
The Office of Management and Budget requires all federal agencies to prepare contingency plans in the event of a shutdown, which specifies the operations that will operate and the ones that will lapse in a time of limited appropriations. The Education Department has yet to release its updated plan, but a 2021 version stated that federal loan servicing could continue "for a very limited time."
Despite the department's plan to resume payments next month, some Democratic lawmakers are continuing to push for a pause on payments if the government shuts down.
"To throw borrowers back into repayment with bad faith loan servicers and an under-staffed Department of Education is a recipe for disaster and would deeply undermine the progress we have made to advance economic justice for student loan borrowers," Rep. Ayanna Pressley said in a Wednesday statement.
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