With the threat of a government shutdown looming, many people are no doubt wondering how that might impact them individually. For example, will Social Security benefits be disrupted? Will people trying to file their tax returns before the mid-October extension deadline encounter any issues?
If lawmakers aren't able to come to an agreement to keep the government funded beyond this week, a shutdown could occur starting Oct. 1. And that just happens to coincide with the start of federal student loan payments after a multiyear pause.
But don't be fooled -- a government shutdown won't get you off the hook when it comes to making student loan payments. If you have a payment due in early October, you should still be gearing up to make it.
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Student loan activity should not be all that impacted
It's estimated that 90% of staff members at the U.S. Department of Education will be furloughed in the event of a federal government shutdown. But that won't change the fact that student loan payments are due.
Student loan payments are largely outsourced to loan servicers, and their job is to process and keep track of that money. The Department of Education isn't really involved in the day-to-day processing of payments. As such, don't expect changes to your first payment's due date.
One thing that might happen is that some student loan applicants could see their funding delayed because certain processes require loan servicers to consult with the Department of Education. But for the most part, student loan disbursements should continue on schedule even in the event of a government shutdown.
Contact your loan servicer ASAP if you have any questions
In many cases, your student loan servicer will be able to address questions or concerns you have about your debt and payments. But in certain situations, a consultation with the Department of Education may be necessary. If you have any questions or issues ahead of your upcoming student loan payment, do your best to reach out to your loan servicer before the end of the week, just in case.
All told, there's apt to be a world of upheaval if a government shutdown occurs. We've come close to the edge before, and ideally, lawmakers will manage to find a way to avoid that. But if not, know that a shutdown won't mean that you no longer have to make your first student loan payment in years.
If you're worried about your ability to make that payment, contact your loan servicer now and talk through your options. Those might include putting your loan into forbearance if you qualify due to a recent financial hardship or changing your repayment plan to one that comes with lower monthly payments.
The latter may be a good option if you're still on the standard repayment plan, which has you paying off your federal loan balance in 10 years. An income-driven repayment plan may be a better option in that situation as it will likely lead to lower monthly payments.
