Sponsors (15)
The bill temporarily shields federal employees and certain contractors with federal student loans from payment, interest, and credit harm during multi-day funding lapses—accelerating forgiveness for some—at the expense of higher federal costs, added administrative complexity, and potential fairness and eligibility disputes.
Federal employees and covered government contractors with federal student loans: loan payments are suspended during funding lapses of 14+ days, no interest accrues, suspended months count toward Part D loan forgiveness, and those months are reported as on-time — reducing balances, preserving credit scores, and bringing borrowers closer to forgiveness.
Federal employees, contractors, and borrowers who made payments during a lapse: can request refunds for payments taken involuntarily during a lapse, restoring money paid when relief should have applied.
U.S. taxpayers: federal costs may rise because the Department of Education forgoes interest and issues refunds during suspension periods, increasing budget outlays.
Education Department and other government administrators: new operational and systems work will be required to implement suspensions, adjust credit reporting, issue refunds, and determine covered individuals, increasing administrative burden and costs.
Government contractors and some federal employees: eligibility gaps and disputes could arise (for example, if some pay was received), creating confusion and potential appeals over who qualifies for suspension or refunds.
Based on analysis of 2 sections of legislative text.
Suspends federal student loan payments, interest, and negative reporting for federal employees and certain contractors unpaid during agency funding lapses of 14+ days, retroactive to Sept 30, 2025.
Introduced October 28, 2025 by Sarah Elfreth · Last progress October 28, 2025
Requires the Department of Education to pause federal student loan payments and related penalties for federal employees and certain contractors who are not paid during agency funding lapses that last 14 days or more. The pause is retroactive to September 30, 2025; while suspended, interest does not accrue, the suspended months count toward eligible loan-forgiveness programs, credit reporting treats the months as on-time payments, and borrowers may request refunds of payments already made for covered months.