Federal workers missing pay would get shutdown student loan pauses

The Education Department would suspend covered borrowers’ Direct Loan payments and stop interest during the suspension. Coverage would include federal employees across all three branches, whether furloughed or working, and some contractors. Workers receiving their ordinary basic pay during the shutdown would be excluded. Contractors must normally support agency employees and stop providing those services during the shutdown. The rule would cover shutdown periods in fiscal year 2026 and later. If enacted, the act would take effect as if enacted on September 30, 2025.

The Education Department would count suspended months toward eligible loan forgiveness and report suspended payments as paid on schedule. These rules would cover borrowers receiving the bill’s shutdown payment pause. Borrowers must otherwise qualify for the Direct Loan forgiveness program. The protections would apply only to payments suspended under this bill. Forgiveness credit would apply to each suspended month, and the credit reporting rule would apply during the payment suspension.

The Education Department could refund eligible Direct Loan payments when borrowers request it. The refund clause covers workers without ordinary basic pay and ties the shutdown to the agency where the borrower is an employee; its application to contractors is unclear. The borrower must request the refund. Issuing a refund would be optional for the Education Department. Refunds could cover payments during qualifying shutdown periods in fiscal year 2026 or later, with the act taking effect as if enacted on September 30, 2025.