Month: October 2025

You’ve probably heard people talking about the government “shutting down.” Here is what it actually means for students trying to pay for college using the FAFSA

You Can Still Fill Out the FAFSA

Even during a government shutdown, the FAFSA website usually stays open. It’s considered an essential service, so you can still go online, fill it out, and submit it like normal.

There Might Be Some Delays

Here’s where a shutdown could make things a little slower. Some Department of Education employees might temporarily not work or get paid.

If that happens, FAFSA applications could take longer to process. And if the IRS is also affected, the Data Retrieval Tool — the part that helps pull in your tax info automatically — might not work right away. That could mean more waiting or having to enter info manually.

Your Aid Money Should Still Come

If you’re already getting financial aid for college your money should still arrive. Schools can still give out funds that were already approved.

But if the shutdown lasts a long time, it might slow down the process for new payments or reimbursements. So, while most students won’t notice much at first, a really long shutdown could eventually cause delays.

Some Verifications Could Be Slower

FAFSA checks certain things with other government systems — like tax info from the IRS or your Selective Service registration (for guys). If those systems are short-staffed, those checks could take longer than usual. Which will again take more time.

What You Can Do

Here are a few ways to stay on top of things during this shutdown:

• Submit your FAFSA early. The earlier you apply, the better your chances of avoiding delays.
• Check your email. If your school or FAFSA needs more info, respond fast so nothing holds up your aid.
• Stay updated. Your school’s financial aid office will share any major updates if the shutdown starts causing problems.

In September 2025, the Federal Reserve trimmed interest rates by 0.25%. That kind of financial headline usually sounds like Wall Street talk — but if you’re paying off student loans, or planning to borrow soon, the Fed’s move may matter more than you think.

While a Fed rate cut doesn’t directly change your federal student loan interest rate overnight, it can impact:

• Future federal loan interest rates
• Private student loan costs
• Refinancing opportunities
• Overall borrowing conditions

Let’s break down how this could affect you — whether you’re in school, repaying loans, or considering refinancing.

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1. Current Federal Student Loans: No Immediate Change

If you already have federal student loans (like Direct Subsidized, Unsubsidized, or PLUS loans), they come with fixed interest rates. That means the rate you got when you borrowed is locked in for the life of the loan.

So even though the Fed just cut rates, your federal student loan payments won’t change as a result.

However, the Fed’s actions can still impact things down the line — especially for future borrowers and anyone with private loans.

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2. Future Federal Loan Interest Rates Could Trend Lower

The U.S. Department of Education resets interest rates for new federal student loans each May, based on the 10-year Treasury note yield — which tends to move in the same direction as Fed policy.

What that means: If Fed rate cuts continue and bring Treasury yields lower, interest rates on next year’s federal student loans may go down.

This won’t change rates for anyone who’s already borrowed, but if you’re taking out loans for the 2026–2027 school year, this could mean cheaper borrowing.

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3. Private Student Loans Could See Lower Rates Sooner

Private student loans — the kind issued by banks or credit unions — are more sensitive to Fed rate changes.

• Many have variable interest rates tied to benchmarks like the prime rate or SOFR, both of which move with the Fed’s rate decisions.
• When the Fed cuts rates, variable-rate private loans often get cheaper — either right away or within a billing cycle.

If you have a private student loan, you might notice slightly lower payments in the coming months.

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4. Refinancing Federal Loans? It Could Get More Attractive — But Be Careful

Fed rate cuts sometimes open the door to lower rates for student loan refinancing, especially through private lenders.

If you’re someone with high-interest federal loans (especially Grad PLUS or older loans above 6–7%), this might sound appealing.

A lower rate = lower monthly payment or faster payoff.

BUT:
Refinancing a federal loan with a private lender means giving up all federal protections, including:

• Income-driven repayment plans
• Deferment and forbearance options
• Public Service Loan Forgiveness (PSLF)

Only consider refinancing if:

• You’re in a strong financial position
• You don’t need those federal protections
• You can qualify for a significantly lower rate

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Bottom Line

The Fed’s recent rate cut doesn’t change your existing federal student loan, but it may help in several other ways:

• New federal loans next year could come with slightly lower rates
• Private loan borrowers may see modest rate drops
• Refinancing could become more affordable — but be cautious
• Your overall financial picture could improve with lower interest on other debts

If you’re a current borrower: Stay on top of your options and don’t rush to refinance.

If you’re still in school: Pay attention to the next round of interest rate announcements in May — you may get a slightly better deal.