Key Updates for Student Loan Borrowers

For the last four weeks, millions of student loan borrowers have been in limbo after the Department of Education (ED) took down applications for income-driven repayment (IDR) plans and suspended all processing.During that time, there has been a whirlwind of developments.Here’s where things stand — and what it means for you.Why IDR plans were paused The department suspended IDR application processing in response to the latest decision by the 8th Circuit Court of Appeals, which has been handling a legal challenge over the Biden-era SAVE plan — one of four separate repayment plans borrowers can select that tie their monthly payments to their income.  In its latest ruling, the 8th Circuit reaffirmed and expanded an injunction blocking the SAVE plan, which has kept more than eight million borrowers stuck in a forbearance.

That forbearance doesn’t count toward student loan forgiveness for IDR or for Public Service Loan Forgiveness (PSLF), and as the months tick by, borrowers are falling further and further behind on their loan forgiveness timelines.The 8th Circuit’s decision technically only enjoins (or blocks) the SAVE plan, although the court also questioned the legality of student loan forgiveness under the Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans, which were created under the same statutory authority (the court found the statute to be ambiguous at best as to whether it authorizes student loan forgiveness).The 8th Circuit made clear that the Income-Based Repayment (IBR) plan, as well as PSLF, were clearly authorized by Congress.But taking an apparently broad view of the injunction, the Trump administration removed the paper and online IDR applications from the Department of Education’s website, and halted all processing.  What this means for borrowers This is already having significant impacts on borrowers: Recent graduates cannot enroll in an IDR plan to get lower payments or pursue PSLF.

Borrowers who are stuck in the SAVE plan forbearance and want to switch to a different repayment plan, like IBR, to resume progress toward PSLF or IDR loan forgiveness cannot do so.Borrowers can’t recertify their income if they are required to, resulting in dramatic increases in monthly payments once their income-driven payments lapse.  The situation is far from static, however, and there have been significant updates in just the last few days.  IDR recertification dates may be moved, but many student loan borrowers are still waiting One of the more immediate concerns for certain student loan borrowers is the annual income recertification process for IDR plans.Under federal law, borrowers are typically required to update their income information for their existing IDR plan on an annual basis, resulting in a recalculation of their payments.Failure to recertify can result in the borrower experiencing a significant increase in their monthly payment, typically based on the equivalent of the 10-year Standard repayment plan for their loan balance (although the specifics vary by plan).  IDR income recertification requires that borrowers complete and submit the IDR application.

But with the application removed, and loan servicers instructed by the Department of Education to halt all processing, borrowers effectively cannot recertify, and some have been reporting big jumps in their monthly payments.Earlier this month, reporting indicated that the Department of Education has instructed loan servicers to push out IDR recertification deadlines into early 2026.At least some loan servicers have been confirming this.  “Recertification of IDR plans will not be required until at least February 2026,” reads a message on the MOHELA website (MOHELA is one of several Department of Education-contracted loan servicers).“SAVE plan recertification dates were already extended.

Income Based Repayment (IBR), Pay As You Earn (PAYE), and Income Contingent Repayment (ICR) plans are in the process of being extended.” However, many borrowers with imminent recertification deadlines have not had their dates moved yet.Student loan servicers have indicated that it may take some time to implement the postponements.  “Please allow a few weeks for this extension to occur,” said MOHELA.“We will notify borrowers when this is complete.” It is unclear what will happen for borrowers whose IDR recertification dates have already expired and whose student loan payments have already increased.These borrowers should contact their loan servicer and ask to speak with a supervisor if necessary.  Lawsuit challenges IDR shutdown Last week, the American Federation of Teachers (AFT), a national labor union for educators, filed a lawsuit against the Trump administration, arguing that the shutdown of the entire IDR system is illegal, and wasn’t required by the 8th Circuit’s court order.  “Congress directed ED to offer income-driven repayment (IDR) plans that tie a borrower’s monthly payment to their income,” reads the Complaint.

“Notwithstanding this clear Congressional command, the Department has chosen to shut down access to all income driven repayment plans.Nor has the Department indicated when it will–if ever–resurrect the programs.The result: borrowers are unable to access affordable monthly payment plans, some borrowers are being thrust into default on their debt, and some public service workers are being denied their statutory right to lower their monthly payment and earn credit towards Public Service Loan Forgiveness (PSLF).” In the suit, AFT notes that under federal law, the Department of Education has a “mandatory” duty to offer affordable repayment plans to student loan borrowers based on their income.And the 8th Circuit’s ruling does not prevent the department from doing so.

“The Eighth Circuit’s decisions do not impact the IBR statute, regulations, or ED’s contractual obligations with respect to IBR,” says the complaint.“The Eighth Circuit’s decisions do not impact the PSLF statute, regulations, or ED’s contractual obligations with respect to PSLF.The Eighth Circuit also did not enjoin the Department from using the ICR plan or the PAYE plan.” AFT is represented by the Student Borrower Protection Center (SBPC) and Berger Montague, PC.The suit was filed in federal district court in the District of Columbia.  Department of Education says IDR applications will reopen, but processing remains on hold On Tuesday, the Trump administration indicated that it would reopen IDR applications for student loan borrowers, possibly as soon as Wednesday, March 26.  Justice Department attorneys made the statement at a scheduling hearing in response to the AFT’s motion for a temporary restraining order, which — if granted — may force the Department of Education to reopen IDR plans.

However, the administration indicated that IDR application processing would not immediately resume, and it was unclear when (or if) that would happen.“Today’s announcement shows that when working people band together and demand justice, we can make progress,” said AFT President Randi Weingarten in a press release on Tuesday evening. “While access to a loan application is important, let’s be clear that until borrowers have the relief the law envisions-public service workers getting the credit to which they are entitled, and all borrowers having access to the programs that allow them to lower their monthly payments in accordance with their earnings, we will keep fighting in court.”  A hearing on the AFT’s motion for a temporary restraining order is now scheduled for April 17.If the Department of Education ultimately does not resume processing of IDR applications so that student loan borrowers can enroll in affordable repayment plans, switch out of the SAVE plan forbearance, and pursue student loan forgiveness through IDR and PSLF, it will ultimately come down to the court’s ruling following that hearing.