Student Loan Forgiveness Paused for IBR Borrowers

Millions of student loan borrowers enrolled in a popular repayment plan are now facing uncertainty, as the U.S. Department of Education has temporarily halted loan forgiveness under its Income-Based Repayment (IBR) program.

Income-driven repayment plans like IBR aim to ease financial pressure by capping monthly loan payments based on a borrower’s income and family size. After 20 years of qualifying payments, borrowers become eligible for loan forgiveness.

At the end of 2024, nearly 40% of the 33 million Americans repaying student loans were enrolled in one of the Education Department’s four IDR plans, according to federal data. But legal challenges have disrupted all four plans. Three of them, the SAVE (Saving on a Valuable Education) plan, Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) were previously blocked by court rulings. And now, the IBR plan has also been affected.

As of this week, forgiveness for approximately 2 million borrowers enrolled in IBR has been paused. The Department of Education confirmed the pause Tuesday, citing ongoing court injunctions related to lawsuits against the Biden administration’s SAVE plan.

“The Department has temporarily paused discharges for IBR borrowers in order to comply with ongoing court injunctions regarding the Biden Administration’s illegal attempts at student loan forgiveness,” said Education Department deputy press secretary Ellen Keast in a statement to CBS MoneyWatch.

The lawsuits stem from the Biden administration’s implementation of the SAVE plan — a sweeping repayment initiative designed to fix flaws in existing IDR programs. SAVE became highly popular, enrolling nearly 8 million borrowers by the end of 2024.

Because the SAVE plan included provisions allowing borrowers to count forbearances and certain non-payments toward loan forgiveness, it also affected forgiveness eligibility in the IBR plan. As a result, the Education Department is now recalculating eligible payment counts and has paused all IBR loan discharges until the process is complete.

The Education Department has not provided a specific timeline for when loan forgiveness under the IBR plan will resume. However, Keast said discharges will restart “as soon as the Department is able to establish the correct payment count.”

Are Other IDR Plans Affected?

Yes. Forgiveness under the SAVE, ICR, and PAYE plans remains blocked by court decisions that questioned whether the Education Department had the legal authority to offer widespread forgiveness under those programs. However, the IBR plan, created under a different legal authority, is still considered valid, though it is now on pause due to the SAVE plan’s entanglement.

What Should Borrowers Do?

Borrowers enrolled in IBR are encouraged to continue making their monthly payments. Even if their forgiveness is delayed, those who are already eligible will be refunded for any overpayments once discharges resume.

“For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments,” Keast said.

Borrowers may also request forbearance through their loan servicer, though doing so may result in interest continuing to accrue on their remaining balance.

Income-Based Repayment Forgiveness Delayed; What Borrowers Need to Know  was originally published on wolbbaltimore.com