Trump administration pauses student loan forgiveness with no explanation. Here's what it means
Income-Based Repayment plans are one of four repayment options offered by the federal government that are calculated by how much a borrower earns.
'Currently, IBR forgiveness is paused while our systems are updated,' the department announced earlier this month, per Forbes. 'IBR forgiveness will resume once those updates are completed.'
The department did not offer a specific timeline for when such updates would be completed.
It comes even though IBRs are the only government repayment plan not currently subject to legal challenge. In February, a federal court issued an injunction preventing the USED from implementing the Saving on a Valuable Education plan and parts of other income-driven repayment plans – including ICR and PAYE.
IBR operates on monthly payments that are generally equal to 15 percent (or 10 percent if the loan occurred after July 1, 2014) of a person's discretionary income, divided by 12, per the department. Loan forgiveness is given to those on IBR after a period of 20 to 25 years.
The repayment program was spared from legal action because it was created by Congress in 2007.
However, Forbes reports that the department is currently not processing such forgivenesses for those who reach the IBR threshold, offering the vague explanation that the process has been paused 'while our systems are updated to accurately count months not affected by the court's injunction," (directed at SAVE).
The Independent has reached out to the Education Department for an explanation as to why IBR forgiveness has also been paused.
In a post on X on Monday, the Department urged all borrowers on the SAVE plan to 'quickly transition to a legally compliant repayment plan, such as Income-Based Repayment.'
Those enrolled on SAVE will begin accruing interest on their loans again on August 1, despite being unable to make further payments due to the court injunction.
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