As furloughed federal workers scramble to cover their bills, members of Congress are imploring the Education Department to help those workers manage their student loans during the partial government shutdown.
Rep. Suzanne Bonamici (D-Ore.) kicked off the effort this week with a letter asking Education Secretary Betsy DeVos to direct student loan servicing companies to contact federal employees with information about their repayment options.
“This unnecessary shutdown is creating needless financial hardship for too many families, and it may push borrowers deeper into student debt,” Bonamici wrote. “These hardworking federal employees want to meet their student loan obligations — even during this shutdown. They deserve the support of the Department of Education and student loan servicers to do so.”
Education Department spokeswoman Liz Hill said the Office of Federal Student Aid has been communicating with federal loan borrowers since the shutdown.
Days before Bonamici sent the letter, which was signed by 70 other lawmakers, the Education Department created a blog that lists options of how federal employees may manage student debt during the shutdown. Government workers can temporarily postpone payments through a deferment or forbearance, but interest will continue to accrue.
Opting for temporary postponement could be detrimental to federal employees seeking Public Service Loan Forgiveness, a program that cancels federal student debt after 10 years of on-time payments for people who take public-sector jobs. Periods of forbearance or deferment will not count toward the payments needed to qualify for the program and could extend the time to loan forgiveness.
A temporary forbearance or deferment would also be tricky for federal workers who are rehabilitating a defaulted student loan. The federal rehab program requires borrowers to make nine consecutive payments over a 10-month period to have the default erased from their credit report. Postponing payments would inhibit the process, according to the Education Department.
Another option for federal workers involves enrolling in an income-driven repayment plan, which pegs monthly payments to earnings. Those already enrolled could have their payments recalculated to account for the dip in earnings by contacting their loan servicer or completing an updated income-driven repayment plan request online. This option would be especially beneficial for federal workers seeking loan forgiveness because even the smallest payments count under the public service program.
Bonamici called the Education Department blog “a positive step forward” but said the federal agency could do more.
“I encourage the Department to provide the same level of outreach to affected federal workers, including directing student loan servicers to proactively contact federal employees affected by the Trump shutdown about managing their student debt,” she said in an email Thursday. “I know this issue is important to many federal employees who are struggling to make ends meet and have already missed a paycheck.”
Though the majority of student loans are originated by the federal government, banks and other private lenders in the market say they are also working to assist furloughed federal workers.
Richard Castellano, spokesman for Sallie Mae, said the Delaware company is “ready and willing to assist customers affected by events out of their control. . . . We encourage customers who are affected by the shutdown and need assistance to call us to discuss their options, including postponing payments.”
Other private student loan lenders have posted notices on their websites alerting customers to the steps being taken to ease financial hardships amid the shutdown. Wells Fargo, for instance, said it will automatically reverse and waive late fees on student loan accounts and work with federal workers to identify short- or long-term assistance options for repayment.
The Consumer Bankers Association said members of the trade group are offering furloughed customers assistance in a variety of ways, including deferments and loan payment assistance.
“At this moment, there has not been an influx of customers needing assistance but that could likely increase as the shutdown continues,” said Nick Simpson, spokesman for the bankers association.