The US Capitol in Washington, DC, US, on Thursday, June 5, 2025.
Eric Lee | Bloomberg | Getty Images
Student loan borrowers might face extra delays
Early Wednesday, the U.S. government shut down after lawmakers failed to achieve a funding deal, which means that federal staff throughout businesses will probably be temporarily put on unpaid leave.
In a Sept. 28 memorandum, U.S. Department of Education Secretary Linda McMahon estimated it might take half a day to finish shutdown actions on the company and that 1,485 workers out of the 1,700 remaining can be furloughed.
The Trump administration’s termination in March of practically half of the workers on the Education Department already included lots of the individuals who assisted borrowers within the Federal Student Aid workplace. Those cuts have led, partially, to a pileup of purposes from borrowers attempting to entry packages required by Congress, together with compensation plans and a loan forgiveness program.
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More than one million borrowers are in a backlog to enroll in an income-driven compensation plan, based on court docket data from mid-September. Meanwhile, 74,510 persons are ready for a dedication from the Education Department on their Public Service Loan Forgiveness standing. (IDR plans cap borrowers’ payments at a share of their revenue every month, and PSLF results in debt erasure for public servants after a decade.)
Some of the borrowers CNBC has spoken with in current months have already been ready six months or extra for a PSLF dedication.
During the shutdown, Federal Student Aid workers “will not be able to perform regular operations, including working on the IDR backlog,” a spokesperson for the Education Department advised CNBC.
Even fewer types will probably be processed than earlier than.
Mark Kantrowitz
greater schooling skilled
The shutdown dangers exacerbating the present disaster for borrowers, mentioned Randi Weingarten, president of the American Federation of Teachers. The AFT filed a class-action complaint in September in opposition to the Trump administration, and has mentioned the Education Department is denying student loan borrowers the rights to which they’re legally entitled.
“The over 1 million borrowers whose applications are sitting on someone’s desk will see even greater delays, with thousands more falling through the cracks for each day,” Weingarten mentioned.
During the lapse in authorities funding, Kantrowitz mentioned, “there will be nobody at the U.S. Department of Education to provide final approval for the forgiveness of a borrower’s loans.”
Still, in McMahon’s memo, she writes, “borrowers are expected to continue repayment throughout a shutdown.”
More than 40 million Americans maintain government-issued scholar loans, they usually owe greater than $1.6 trillion.