Despite the ongoing US government shutdown, some federal student loan borrowers have begun receiving notices that their debt will soon be discharged. These unexpected emails from the US Department of Education confirm that loan forgiveness is proceeding, even though much of the government’s operations remain on hold.This development comes as a surprise to many borrowers who feared their loan relief might be paused indefinitely due to political gridlock. According to multiple notices reviewed by CNBC, the Education Department is moving forward with cancelling some or all federal student loans for eligible borrowers under the Income-Based Repayment (IBR) Plan.Student loan forgiveness continues despite shutdownAn email sent to one borrower reads: “You are now eligible to have some or all of your federal student loan(s) discharged because you have reached the necessary number of payments under your Income-Based Repayment (IBR) Plan,” as reported by CNBC. The notice also states that the discharge process will take place “over the next several months” and recipients have until October 21 to opt out of the relief.The US Department of Education temporarily paused loan forgiveness earlier this year while it responded to court orders that affected which payment periods counted towards loan discharge. The pause caused concern among borrowers who had been making payments for decades, expecting their loans to be forgiven after 20 or 25 years under the IBR plan.How recent policies affect student loan reliefIn July, the Education Department announced the temporary halt of IBR forgiveness. This followed recent court rulings and the passage of President Trump’s “big beautiful bill,” which phases out several existing repayment plans. Currently, the IBR plan is the only one that offers debt forgiveness.The American Federation of Teachers, representing nearly 2 million members, filed a lawsuit in March against the Trump administration, accusing it of denying borrowers their rights by delaying loan forgiveness. The union warned that delays could saddle borrowers with unexpected tax bills if discharges occurred after December, due to changes in tax law.The American Rescue Plan Act of 2021 made student loan forgiveness tax-free at the federal level through the end of 2025. However, the new legislation under President Trump’s administration did not extend or make permanent this tax exemption.What borrowers should know about the processBorrowers who receive these notices must decide by October 21 whether to accept or opt out of the debt discharge. The discharge applies to federal loans made under the IBR plan, which forgives remaining balances after 20 or 25 years of qualifying payments.The Education Department’s email states that the discharge process will take several months to complete. This gradual rollout explains why borrowers are receiving notifications during the government shutdown.This continuation of loan forgiveness during a shutdown is unusual, as most federal services pause or slow down. However, student loan discharge processes appear to be classified separately, allowing them to proceed.As reported by CNBC, borrowers should carefully review any notices received and consult official Department of Education communications for the latest guidance on their loan status and options.
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