Applications and loan forgiveness halted for income-driven repayment plans. Here’s how this will affect borrowers.
A federal judge ordered the U.S. Department of Education to stop operating its SAVE repayment program and parts of other IDR plans.
The federal government has temporarily halted applications and loan forgiveness for all income-driven repayment (IDR) plans for student loans.
In February, a federal judge upheld a previous ruling that prevents the U.S. Department of Education from operating the student loan repayment program known as SAVE, as well as portions of other IDR plans. The ruling also questions the legality of additional repayment programs, such as Pay As You Earn (PAYE) and income-contingent repayment (ICR) plans.
In response, the Education Department has halted applications for all IDR plans and will not process loan forgiveness for these plans during the injunction — even for borrowers who have completed 20 to 25 years of payments. The department also removed online applications for loan consolidation, which many borrowers need to qualify for Public Service Loan Forgiveness (PSLF). Paper applications remain available for download.
However, borrowers enrolled in PSLF remain unaffected — applications remain open, and forgiveness is still being granted.
Income-based repayment (IBR) plans, which were created by Congress in 2009, also remain unaffected, including their loan forgiveness provisions. The federal court order only applies to repayment plans established by the Education Department, according to the agency’s announcement.
“Difficult to Comprehend”
Critics say the changes have been poorly communicated.
“I believe this is intentionally very difficult to comprehend,” said Kristin McGuire, executive director of social action nonprofit Young Invincibles. “The issue here is that there was no public announcement besides the government’s IDR website. This caught a lot of folks by surprise and I think without a thorough explanation it makes it really difficult for the average borrower.”
What are income-driven repayment plans?
The Education Department operates several student loan repayment programs that aim to make payments more affordable based on household size and income. These plans also offer loan forgiveness for any remaining balance after 20 to 25 years of qualifying payments.
However, not all IDR plans were created the same way. Some were enacted by Congress, while others were established by the Education Department under White House direction. The court injunction applies only to department-created plans, which are currently closed to new applicants and not processing loan forgiveness.
Borrowers enrolled in the SAVE program are currently in forbearance, meaning no payments are required and no interest is accruing. However, time spent in forbearance does not count toward loan forgiveness.
Here’s a breakdown.
Which repayment plans are affected?
IDR plans impacted by the federal court order
Saving on a Valuable Education (SAVE): Formerly known as REPAYE, the SAVE program was introduced by the Biden administration to lower monthly payments — sometimes to $0 — and accelerate loan forgiveness for some borrowers.
❌ No new applications accepted
❌ No payments required
❌ No interest accrual
❌ Time toward loan forgiveness does not count
Income-contingent repayment (ICR): Similar to the SAVE program, except ICR requires 20% of discretionary income for monthly payments, compared to SAVE’s 10%.
❌ No new applications accepted
✅ Payments required
✅ Interest accrues
❌ Time toward loan forgiveness does not count
Pay as you Earn (PAYE): Requires only 10% of discretionary income for monthly payments, but lacks SAVE’s interest-freezing feature.
❌ No new applications accepted
✅ Payments required
✅ Interest accrues
❌ Time toward loan forgiveness does not count
Repayment plans not impacted by the federal court order
Income-based repayment (IBR): Created by Congress, IBR calculates monthly payments based on household size and income, capping payments at 10% to 15% of discretionary income. The plan also covers interest on subsidized loans for the first three years if the borrower’s payment doesn’t fully cover accrued interest.
✅ Accepting new applications
✅ Payments required
✅ Interest accrues
✅ Time toward loan forgiveness counts
However, new borrowers seeking to apply for IBR face an obstacle: Applications for the plan must be submitted using the general income-driven repayment application, which also covers SAVE, PAYE, and ICR plans. Since the general IDR application portal on the Federal Student Aid website has been taken down, there is currently no way for new borrowers to apply for IBR.
Borrowers already enrolled in an IDR plan can contact their loan servicer to switch to IBR.
Keep in mind: It is unclear whether borrowers are facing delays or difficulties when changing repayment plans.
What if I’m enrolled in an income-driven repayment plan?
The federal court order affects borrowers enrolled in the SAVE, PAYE, and ICR plans.
SAVE program borrowers: Can remain in forbearance or contact their loan servicer to switch to IBR if they want payments to count toward loan forgiveness.
PAYE and ICR borrowers: Should continue making monthly payments, as interest will accrue. However, payments made under these plans during the injunction will not count toward loan forgiveness.
Switching to IBR: The Education Department advises that borrowers in PAYE or ICR who want their payments to count toward loan forgiveness should switch to IBR by contacting their loan servicer.
When in doubt, borrowers should contact their federal loan servicer to discuss repayment options.
How can student loan borrowers protect themselves?
Student loan repayment changes are happening quickly and often with little notice, said McGuire, whose nonprofit advocates for education financing reform.
She advises borrowers to document their payments and interactions with student loan institutions by saving bank statements, taking screenshots of payment receipts, and keeping records of loan servicer communications.
“If you are able, continue to make your payments and keep your own records,” McGuire said. “We’ve seen information being removed from websites or issues where some folks were having trouble logging into their loan repayment portal.”
She also recommended logging into student loan accounts to verify that personal information is correct and checking for any updates on loans.
Additionally, McGuire encouraged borrowers affected by the repayment freeze to contact their local, state, and national elected officials to voice concerns about how these changes impact daily life.