Latest news with #ICR
Los Angeles Times
24-07-2025
- Business
- Los Angeles Times
What's happening with forgiveness for student loans on income-based repayment plans?
Amid a federal overhaul of student loan plans, many borrowers have been left wondering what it means for their hopes of loan forgiveness. In particular, those who are enrolled in a repayment plan known as income-based repayment, or IBR, have wondered if forgiveness will still be available to them. A recent update from the Education Department said forgiveness through the IBR plan is paused while systems are updated. 'IBR forgiveness will resume once those updates are completed,' the agency said. IBR is not affected by a federal court's injunction blocking former President Joe Biden's Saving on a Valuable Education, or SAVE, plan. The IBR plan was created by Congress separately from other existing repayment plans, including those known as PAYE and ICR. It's also exempt from some changes coming from President Donald Trump's tax and spending bill. Here's what to know. Following a court injunction last summer, loan forgiveness for the SAVE, Income-Contingent Repayment, or ICR, and Pay As You Earn, or PAYE, plans is currently paused because those plans were not created by Congress. The legal action called into question whether student loan forgiveness was authorized under the federal statute that governs those plans. The IBR plan was created under a different authority. IBR, created by Congress, reduces monthly payments for borrowers with lower incomes. It also invokes a statute that authorizes student loan forgiveness of the balance at the end of a 20- or 25-year repayment term. The Education Department hasn't given a timeline for when its system update will be complete and forgiveness will resume. Borrowers enrolled in IBR who have reached the threshold for forgiveness but who are not seeing their loans discharged as a result of the pause may continue to make payments with the expectation that the Education Department will refund the excess payments. The plan offers forgiveness after 240 or 300 monthly payments, depending on when borrowers enrolled. Borrowers can also request forbearance from their loan servicer. In that case, interest would continue to accrue on any remaining balance. Trump's tax and spending law will eventually phase out the ICR, PAYE and SAVE plans, replacing them with the Repayment Assistance Plan. IBR plans will continue to exist and to provide forgiveness after 20 or 25 years. RAP, in contrast, will require 30 years of repayment before forgiveness is granted. Lewis writes for the Associated Press.
Black America Web
24-07-2025
- Business
- Black America Web
Student Loan Forgiveness Paused for IBR Borrowers
Source: Deepak Sethi / Getty 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
Associated Press
22-07-2025
- Business
- Associated Press
What's happening with forgiveness for student loans on income-based repayment plans?
NEW YORK (AP) — Amid a federal overhaul of student loan plans, many borrowers have been left wondering what it means for their hopes of loan forgiveness. In particular, those who are enrolled in a repayment plan known as income-based repayment, or IBR, have wondered if forgiveness will still be available to them. A recent update from the Education Department said forgiveness through the IBR plan is paused while systems are updated. 'IBR forgiveness will resume once those updates are completed,' the agency said. IBR is not affected by a federal court's injunction blocking former President Joe Biden's Saving on a Valuable Education, or SAVE, plan. The IBR plan was created by Congress separately from other existing repayment plans, including those known as PAYE and ICR. It's also exempt from some changes coming from President Donald Trump's tax and spending bill. Here's what to know. Which income-driven repayment plans are affected by the court's injunction? Following a court injunction last summer, loan forgiveness for the SAVE, Income-Contingent Repayment, or ICR, and Pay As You Earn, or PAYE, plans is currently paused because those plans were not created by Congress. The legal action called into question whether student loan forgiveness was authorized under the federal statute that governs those plans. The IBR plan was created under a different authority. IBR, created by Congress, reduces monthly payments for borrowers with lower incomes. It also invokes a statute that authorizes student loan forgiveness of the balance at the end of a 20- or 25-year repayment term. When will IBR forgiveness resume? The Education Department hasn't given a timeline for when its system update will be complete and forgiveness will resume. Should a borrower continue to make IBR payments in the interim? Borrowers enrolled in IBR who have reached the threshold for forgiveness but who are not seeing their loans discharged as a result of the pause may continue to make payments with the expectation that the Education Department will refund the excess payments. The plan offers forgiveness after 240 or 300 monthly payments, depending on when borrowers enrolled. Borrowers can also request forbearance from their loan servicer. In that case, interest would continue to accrue on any remaining balance. What changes are coming from Trump's 'big beautiful bill'? Trump's tax and spending law will eventually phase out the ICR, PAYE and SAVE plans, replacing them with the Repayment Assistance Plan. IBR plans will continue to exist and to provide forgiveness after 20 or 25 years. RAP, in contrast, will require 30 years of repayment before forgiveness is granted. ___ The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Axios
22-07-2025
- Business
- Axios
What to know about forgiveness pause in IBR student loan repayment plans
The Department of Education has temporarily suspended loan forgiveness under its popular Income-Based Repayment plan (IBR). Why it matters: IBR is the only current student loan forgiveness plan not subject to a legal challenge or court injunction, and Trump's signature " big, beautiful bill" significantly cut back on repayment options for borrowers. How it works: Income-Based Repayment is one of four federal plans that establish monthly payments based on earnings and family size over a 20 or 25 year period. Monthly payments are generally equal to 15% of a person's discretionary income (10% if you are a new borrower on or after July 1, 2014), divided by 12, per the DOE. After the 20 or 25 years, remaining loan balances are eligible for forgiveness. What's happening: The DOE said it was pausing forgiveness under the plan in an FAQ earlier this month. The reason for the pause, it says, has to do with required changes to forgiveness calculations caused by court actions impacting the related SAVE Plan. "Currently, IBR forgiveness is paused while our systems are updated," the department said. "IBR forgiveness will resume once those updates are completed." What they're saying: In a statement to Axios, Ellen Keast, Deputy Press Secretary repeated that the IBR pause was to "comply with ongoing court injunctions regarding the Biden Administration's illegal attempts at student loan forgiveness." "For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume." Here's what to know: How many people will be impacted by the IBR suspension? About 2 million borrowers are enrolled in the plan. What other repayment plans are suspended? After much court back-and-forth, the SAVE, ICR, and PAYE plans are all in legal limbo. IBR was created separately by Congress, which is why it was exempt from the freeze. What does the One Big Beautiful Bill Act change? The bill cuts the number of repayment plan choices that federal student loan borrowers have down to two. One is a standard repayment plan, which gives borrowers a fixed monthly payment to repay their loans in 10–25 years. The current standard plan has a loan period of 10 years, regardless of loan size. The other is the Repayment Assistance Plan, which will involve monthly payments between 1% and 10% of a borrower's discretionary income (current offerings set payments at 10%, 15% or 20% of income). Borrowers on any current repayment plan other than the Saving on a Valuable Education (SAVE) plan will be able to keep their current payment structure, however. What happened to the SAVE plan? The BBB changes will affect those who take on loans from July 1, 2026, onward and current SAVE plan borrowers, as an appeals court blocked the Biden administration plan in February. Under the Republicans' plan, SAVE borrowers will have between July 2026 and July 2028 to choose a new plan. After July 1, 2028, those borrowers, if they haven't chosen one, will automatically be enrolled in the income-based repayment plan. There are about 8 million
Time of India
21-07-2025
- Business
- Time of India
Student loan forgiveness IBR: Why relief is delayed, and what you can do now
Live Events What is IBR and why is it important? So why is forgiveness under IBR paused? No court is blocking IBR forgiveness Other program delays are adding to the confusion Over 1.5 million IDR applications are stuck in a backlog. The Department recently told borrowers on SAVE to switch to IBR, even though IBR forgiveness is currently paused. Interest will restart in August for borrowers previously under SAVE forbearance. Under the recently signed " Big, Beautiful Bill, " a new plan, the Repayment Assistance Plan (RAP), will replace SAVE, PAYE, and ICR. What can borrowers do right now? You can continue making payments; any extra payments beyond your qualifying 20 or 25 years should eventually be refunded. You can also ask your servicer for a temporary forbearance, but be aware that interest will continue accruing during this time. (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The US Department of Education has quietly paused student loan forgiveness under the Income-Based Repayment (IBR) plan, a move that has surprised many, given that IBR is the only major income-driven repayment plan not affected by ongoing legal other plans like SAVE, PAYE, and ICR are currently blocked due to federal court injunctions, IBR was created by Congress and explicitly authorizes loan forgiveness after 20 or 25 years of qualifying this legal clarity, thousands of eligible borrowers who have reached their forgiveness milestone have found their relief stalled with no clear sudden pause comes amid overall disruption in the federal student loan system, marked by massive processing delays, legal uncertainty, and significant policy shifts under the Trump Education Department has attributed the IBR freeze to 'system updates' in response to the SAVE-related court rulings, but critics and legal experts argue that no such updates should interfere with IBR IBR plan is one of several income-driven repayment (IDR) options for federal student loan borrowers. It helps borrowers by lowering their monthly payments based on their income and family size. After 20 or 25 years of qualifying payments, borrowers are supposed to get their remaining loan balance makes IBR unique is that it was created by Congress, and unlike newer plans such as SAVE, it has clear legal authority for forgiveness. That's why recent court rulings do not apply to its legal backing, the Education Department has paused forgiveness processing under IBR, citing "system updates."In a recent update, the department said: 'Currently, IBR forgiveness is paused while our systems are updated… forgiveness will resume once those updates are completed.'There is no clear timeline for when this pause will end. Some borrowers who met the 20- or 25-year threshold have been waiting since mid-2024 without getting their promised IDR plans like SAVE, PAYE, and ICR are blocked due to a court injunction from a lawsuit challenging the legality of the SAVE plan . Since these were created by regulation, not by Congress, they are on Congress passed IBR into law, and courts have not blocked forgiveness under it. The Department of Education itself confirmed: 'ED can and will still process loan forgiveness for the IBR Plan, which Congress separately enacted.'The IBR pause is happening alongside massive disruptions across the student loan system:Current IBR borrowers will be allowed to stay enrolled and qualify for forgiveness, but new borrowers won't have access to the plan once RAP takes you've already reached your IBR forgiveness threshold but haven't received a discharge:
