The Trump administration’s Department of Education has ceased new enrollments for four widely used federal student loan repayment programs, which provide borrowers with manageable payment options and an eventual route to student loan forgiveness. As more details emerge, the impact on borrowers is becoming increasingly evident.
Following a February court ruling that extended an injunction preventing the implementation of the SAVE plan—an income-driven repayment initiative introduced by the Biden administration in 2023—the Department of Education removed online and paper applications for all IDR plans. These programs, including Income-Based Repayment, Income-Contingent Repayment, Pay As You Earn, and the SAVE plan, determine monthly student loan payments based on a borrower’s income and family size, with any remaining balance forgiven after a repayment period of 20 or 25 years. A lawsuit filed by Republican-led states last year sought to block the SAVE plan, contending that it was unlawful.
The Department of Education did not publicly announce the withdrawal of IDR applications beyond a brief notice on its website. No explanation was provided regarding the implications for student loan borrowers. However, after several days of uncertainty, the full extent of the situation concerning student loan forgiveness and reduced repayment options is now becoming clearer.
Suspension of Student Loan Repayment Plans Stems from Court Decision
The decision to suspend access to IDR plans follows a ruling by the 8th Circuit Court of Appeals last month. This ruling extended a preliminary injunction on the SAVE plan, leaving over eight million borrowers in a forbearance period that suspends both interest and payments. However, this pause also halts progress toward student loan forgiveness under IDR plans and Public Service Loan Forgiveness (PSLF), a program that enables nonprofit and government employees to qualify for loan forgiveness in as little as ten years.
The court also questioned the validity of student loan forgiveness under the ICR and PAYE plans, which were established based on legislation passed by Congress in 1993. This legal stance contradicts three decades of assurances given to borrowers through regulations, loan agreements, and public guidance, which had consistently affirmed that forgiveness would be granted after the repayment term. The court, however, did not challenge the IBR plan, which was created separately by Congress, or PSLF, both of which remain unaffected.
IDR Plan Processing Suspended, Creating Barriers to Lower Payments and Loan Forgiveness
The Department of Education provided little public communication regarding the status of IDR plans, leading to confusion when the applications were quietly removed from the StudentAid.gov website. Other than a simple banner notice citing the 8th Circuit’s ruling, no official statement was issued. The department later updated a webpage dedicated to SAVE plan legal challenges, merely confirming the removal of IDR applications.
According to recent reporting by The Washington Post, the issue extends beyond just removing applications—processing for all IDR plans has been entirely suspended. This includes the IBR plan, which is not covered by the 8th Circuit’s injunction and faces no legal challenge. The halt applies to all IDR applications, even those submitted before the court order. The reason, as stated by the Post, is that the Department of Education uses a single application for all IDR plans, requiring modifications to comply with the court’s ruling.
This development poses significant challenges for borrowers. Many had planned to enroll in the IBR plan—the only available option not directly affected by the court decision—to maintain progress toward loan forgiveness through IDR terms or PSLF. Given the current SAVE plan forbearance and new restrictions on ICR and PAYE plans, the loss of access to IDR options leaves borrowers in a precarious position.
“This was a purposeful decision by the Trump Administration to harm borrowers and in no way needed to be done," said Natalia Abrams, president and founder of the Student Debt Crisis Center, in a statement last week. "Shutting down access to income-driven repayment plans was not the decision of the 8th Circuit—it was a malicious move by the Administration that will create serious hardship for millions of working families."
Income Recertification Also Affected for Student Loan Borrowers
Borrowers already enrolled in IDR plans, except for those using the SAVE plan, should still be able to continue making payments despite the processing halt. However, all IDR participants must periodically recertify their income to adjust their monthly payments. Failure to complete this process can lead to higher payments and, in some cases, interest capitalization. Currently, the only way to recertify income is by completing an IDR application, which is now unavailable.
Loan servicers should be postponing annual recertification deadlines due to the IDR processing pause, as stated by a representative from a student loan servicing industry group to The New York Times. However, reports indicate that some servicers are providing borrowers with limited options: either switching to a Standard, Extended, or Graduated repayment plan—often leading to significantly higher payments and no progress toward forgiveness—or entering a hardship forbearance, which is temporary and may lead to substantial interest accrual.
Processing Suspension May Last for Months, Delaying Access to Lower Payments and Loan Forgiveness
The Department of Education has not offered guidance on how long the IDR processing suspension will last. However, a memo obtained by The Washington Post indicates that loan servicers were informed the pause could continue for 90 days—or possibly even longer.
Borrowers who submitted IDR applications have already faced extended processing delays. A prolonged suspension, combined with the inevitable backlog of applications once processing resumes, could have severe consequences. The delay further postpones access to the reduced payments and loan forgiveness options that borrowers should be entitled to under federal law.
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