Over 1 Million Borrowers Affected by Federal Shutdown and Loan Backlog

Washington, D.C. — The federal government shutdown on October 2, 2025, has left over 1 million student loan borrowers facing unprecedented delays in accessing income-driven repayment (IDR) plans. With Congress unable to reach a funding agreement, most federal workers at the U.S. Department of Education are now on unpaid leave, halting much of their regular operations.

This backlog was already significant before the shutdown, with court records indicating that as of August 31, 1,076,266 applications for IDR plans were pending. “Even before the shutdown, borrowers were at a breaking point,” said Michele Zampini, associate vice president of federal policy and advocacy at The Institute for College Access & Success.

During this shutdown, Federal Student Aid staff cannot work on the processing backlog, a spokesperson confirmed to CNBC. This has left many borrowers stuck in high-interest plans, facing rising payments without the option to switch to more affordable alternatives.

Mark Kantrowitz, a higher education expert, noted that the lack of progress during the shutdown is disruptive and, unfortunately, expected. Many borrowers had hoped to transition away from the now-defunct Saving on a Valuable Education (SAVE) plan, which capped monthly payments based on income.

Interest on loans has begun accruing again since August 1, a shift initiated by the Trump administration before the shutdown. Borrowers awaiting IDR plan approvals now face additional stress as they are unable to make progress towards forgiveness options, including Public Service Loan Forgiveness (PSLF).

While waiting for resolution, experts encourage borrowers to save any money they would typically put towards payments. “This way, you’ll have funds ready when you finally switch repayment plans,” Kantrowitz advised.

Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, echoed this sentiment, urging borrowers to maintain thorough records of their applications. Once processing resumes, she emphasized the importance of following up to ensure that applications remain on track.

The situation highlights significant challenges that borrowers face during the federal government shutdown, leaving many in a state of financial uncertainty. Until normal operations resume at the Education Department, millions await decisions on their overdue loan applications.