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Time of India
4 days ago
- Business
- Time of India
Student loan forgiveness under IBR plan temporarily paused in the US: What borrowers need to know now
In a development impacting millions of student loan borrowers across the United States, the Department of Education has temporarily paused loan forgiveness under the Income-Based Repayment (IBR) plan. The decision comes amid a series of legal and administrative challenges stemming from ongoing lawsuits targeting the Biden administration's broader student loan relief efforts. Roughly 2 million borrowers enrolled in IBR, one of the oldest and most widely used federal income-driven repayment (IDR) plans, are affected by this pause. The move reflects a growing legal entanglement involving multiple federal repayment programs and has added to the uncertainty surrounding student loan forgiveness. Why has IBR forgiveness been paused? The pause follows federal court injunctions issued in response to legal challenges over the SAVE (Saving on a Valuable Education), ICR (Income-Contingent Repayment), and PAYE (Pay As You Earn) plans. Although the IBR plan was initially unaffected, being established under different legal authority, it is now temporarily included in the freeze due to overlapping issues with how payments are counted across IDR programs. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like TV providers are furious: this gadget gives you access to all channels Techno Mag Learn More Undo The Department of Education has stated that it is working to recalculate payment histories to ensure that discharges are accurate and legally compliant. This recalibration is necessary because SAVE-related discharges could influence eligibility calculations under other IDR plans, including IBR. What the IBR forgiveness pause means Borrowers enrolled in the IBR plan who have either completed or are nearing the 20- or 25-year repayment threshold are the ones most likely impacted by the current pause. While loan forgiveness has been temporarily suspended, these individuals are still considered eligible for discharge once the Department of Education completes its recalculations. Despite having technically qualified for forgiveness, borrowers are advised to continue making their scheduled payments. Halting payments without official confirmation could lead to missed qualifications or accrued penalties. For those facing financial difficulty, forbearance remains an option, but it's important to note that interest will continue to accrue during that period. The Department of Education has reassured borrowers that no payments made beyond the forgiveness point will be lost. Once discharges resume, any overpayments made during the pause will be refunded. Importantly, this administrative hold does not mean the IBR plan is ending. The program remains in effect, and both its repayment structure and eligibility rules are unchanged—the pause applies only to forgiveness processing, not to enrollment or payment terms. Borrowers are encouraged to check their loan status regularly via their loan servicer or the official Federal Student Aid website and stay updated on the Department's announcements. How to respond to the pause The Department of Education has issued the following guidance for borrowers affected by the pause: Continue making payments: Payments made during this pause will still count toward forgiveness. Refunds guaranteed: Any payments made after reaching forgiveness eligibility will be refunded once the loan is discharged. Forbearance is an option: Borrowers experiencing financial hardship can request a temporary forbearance, although interest will continue to accrue during this time. Stay updated: No firm timeline has been given for when forgiveness will resume, but the Department has assured that eligible discharges will proceed once the recalculations are complete. What's next? As the Department of Education continues to navigate legal and logistical hurdles, many borrowers are left in limbo. For those who have faithfully made payments for decades, the delay is both financially and emotionally taxing. This situation underscores the complexity of the US student loan system, where overlapping repayment programs, shifting legal rulings, and evolving administrative policies can quickly upend expectations. More than 33 million borrowers are enrolled in federal income-driven plans, and the outcome of this recalibration effort could set important precedents for how forgiveness is implemented across the board. TOI Education is on WhatsApp now. Follow us here . Ready to navigate global policies? Secure your overseas future. Get expert guidance now!
CNBC
5 days ago
- Business
- CNBC
Student loan forgiveness paused under a popular repayment plan. Here's what to know
The U.S. Department of Education has temporarily paused debt forgiveness under a popular repayment plan for student loan borrowers. In an FAQ on the department states that loan forgiveness for borrowers enrolled in the Income-Based Repayment plan is on hold while it responds to court orders. IBR is one of the department's income-driven repayment plans, also called IDRs. Congress created the first IDR plans back in the 1990s to make student loan borrowers' bills more affordable. The plans cap people's monthly payments at a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years. More from Personal Finance:Trump's 'big beautiful bill' slashes CFPB funding78% say Trump's tariffs will make it harder to deal with debtTax changes under Trump's 'big beautiful bill' — in one chart IBR will be one of only a few repayment options left to millions of borrowers, after recent court actions and the passage by Congress of President Donald Trump's "big beautiful bill." That legislation phases out several income-driven repayment plans. Here's what to know about the delay in debt relief for IBR borrowers. Student loan forgiveness is paused for IBR borrowers because of court actions involving the Biden-administration-era SAVE, or Saving on a Valuable Education, plan, the department said. Former President Joe Biden touted SAVE as the most affordable income-driven repayment plan in history, but its generous terms soon became a point of controversy for Republicans. In February, the 8th U.S. Circuit Court of Appeals sided with GOP-led states that sued to block the SAVE plan rule, which had sweeping impacts on student loan repayment. For example, under the rule, certain periods during which borrowers postponed their payments would count toward their forgiveness timeline. With SAVE blocked, borrowers no longer get credit during those forbearances. "So the U.S. Department of Education will need to make changes to the qualifying payment counts," said higher education expert Mark Kantrowitz. Ellen Keast, deputy press secretary at the Education Dept., said IBR discharges would resume "as soon as the Department is able to establish the correct payment count." The hold on IBR discharges shouldn't impact student loan borrowers who are still years away from debt forgiveness, experts said. However, they may not receive credit for any periods during which their bills were paused. If you're pursuing debt erasure under IBR, your payments made under the plan (or another income-driven repayment plan) will still be bringing you closer to debt cancellation, as long as you are enrolled in IBR when you become entitled to that relief. If you expected your debt to be forgiven shortly, you should continue making payments, Kantrowitz said. You don't want to be flagged as late. "Any excess payments will be refunded," Kantrowitz said.
Axios
5 days ago
- 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
The Hill
5 days ago
- Business
- The Hill
Education Department pauses student loan forgiveness under IBR plan
The Education Department has paused student loan forgiveness under the Income-Based Repayment (IBR) plan without a clear timeline of when it might resume. The department argues any IBR forbearances were impacted by ongoing court action. '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. The Department's SAVE rule provided the authority to count forbearances in IBR toward loan forgiveness, but that rule has been enjoined,' said Ellen Keast, deputy press secretary for the department. 'Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count. For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume,' she added. The Department of Education is working through a court's injunction after the Biden administration's Saving on Valuable Education (SAVE) plan was ruled illegal. The agency argues that while the case did not impact forgiveness under IBR, what type of forbearances would count for loan discharges were. IBR allows individuals to make payments based on income and family size, receiving forgiveness after 20 to 25 years of consecutive payments. The department has encouraged individuals to join this plan as it shuts down the SAVE option. Those on SAVE will see interest accrual restart at the beginning of August and be kicked off the plan entirely in the following year.
Newsweek
5 days ago
- Business
- Newsweek
Student Loans: Trump Admin Issues Update Impacting Millions of Borrowers
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The Department of Education under President Donald Trump has suspended student loan forgiveness for borrowers enrolled in the Income-Based Repayment (IBR) plan. The pause impacts around 2 million borrowers seeking relief under one of the last remaining federal income-driven repayment options not blocked by legal challenges or court orders. System updates tied to related legal actions against other forgiveness plans have stalled processing for those reaching the end of their IBR payment terms, leaving borrowers in limbo as they await clarity on when forgiveness may resume. "Currently, IBR forgiveness is paused while our systems are updated," the Department said in an updated guidance earlier this month. "IBR forgiveness will resume once those updates are completed." "Student loan borrowers who anticipated that a portion of their loans would be wiped out are in panic mode," Erica Sandberg, Consumer Finance Expert at told Newsweek in part. Why It Matters The shift affects a federal student loan system serving more than 40 million Americans and carrying over $1.6 trillion in debt. Recent restructuring efforts and legal battles, such as the suspension of the Biden-era SAVE (Saving on a Valuable Education) plan, have triggered widespread confusion, bottlenecks, and delays in debt relief. The IBR suspension compounds uncertainty for borrowers relying on income-driven repayment as an attainable path to loan forgiveness. Meanwhile, Congress has enacted reforms through the "One Big Beautiful Bill Act," which eliminates most current repayment plans and rewrites the rules for future loan forgiveness. U.S. President Donald Trump answers questions while departing the White House on July 11, 2025 in Washington, DC. U.S. President Donald Trump answers questions while departing the White House on July 11, 2025 in Washington, To Know The Department of Education attributed the suspension to technical system updates, indirectly referencing recent federal court injunctions against the SAVE plan, which was introduced under former President Joe Biden. Although legal action has directly blocked SAVE, the Department extended the processing freeze to the IBR plan. IBR participants who have reached the forgiveness threshold—20 or 25 years of qualifying payments—are unable to have their balances canceled for now. "Student loan borrowers who anticipated that a portion of their loans would be wiped out are in panic mode," Erica Sandberg, Consumer Finance Expert at told Newsweek. "Formal forgiveness under all repayment plans except the Income-Based Repayment (IBR) plan have been blocked, at least for now." Borrowers may continue making payments (which could later be refunded after loan discharge) or request a forbearance to suspend payments until the Department lifts the pause. However, interest will accrue during forbearance periods, adding to borrowers' eventual repayment totals. The Department has not offered a definitive timeline for when IBR forgiveness processing will resume, leaving roughly 2 million Americans with limited relief options. The Trump administration's restructuring of federal student loan programs is accompanied by legislative changes from the "Big, Beautiful Bill," which consolidates repayment options and implements strict new borrowing caps. The approved bill also sets a maximum 30-year term for forgiveness under the future Repayment Assistance Plan (RAP). Existing plans—including IBR, PAYE, and ICR—will be eliminated for new borrowers starting July 1, 2026, and current participants will be transitioned by July 2028. The Biden-era SAVE plan, which offered a 5 percent payment cap for undergraduate loans, remains blocked in court. The Department of Education's staff layoffs and system modernization, along with continued litigation, have created major backlogs in loan servicing and income-driven repayment applications. Millions of borrowers had their repayments or forgiveness decisions delayed for months as paperwork stalled and communication faltered, leaving borrowers uncertain about next steps or eligibility for new programs. "The Trump administration wants to roll back most of the forgiveness policies, and they'll do everything they can—within the legal structure—to make that happen," Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. "This is just another example of how they'll either force repayment or make forgiveness harder to access." Newsweek reached out to the Department of Education for comment via email. What People Are Saying Erica Sandberg, consumer finance expert at told Newsweek: "Anyone expecting that a portion of their obligations would be forgiven must now take the wait and hope approach. Student loan debt cancellation would have been available to people who had a remaining balance at the end of their repayment term, either 20 or 25 years depending on the origination date of their their loans. It was the light at the end of the tunnel." Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "This is going to be debilitating for many. Borrowers were expecting these loans to eventually be forgiven, and now they're facing even more uncertainty." Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "Unlike some of the forgiveness efforts introduced by the Biden administration, the income-based repayment plan was actually one congressionally approved that allows for forgiveness after a 20- or 25-year repayment term. There's a degree of shock in this, as many assumed this plan would be safe, even as other plans like SAVE were legally challenged. At this point, it's just suspended, but borrowers on the plan need to pay careful attention in the coming weeks to any developments." What Happens Next Borrowers affected by the IBR forgiveness pause are advised to monitor their loan servicer accounts, continue making payments if able, and consider seeking forbearance with careful consideration of interest accumulation. The Department of Education has not clarified when the system updates or forgiveness processing will resume. Meanwhile, the transition to the "Big, Beautiful Bill" repayment programs is expected over the next three years, and further legal developments could influence broader debt relief options for millions. "Removing loan forgiveness from the equation has devastated financially strapped borrowers," Sandberg said. "It's even worse for those who have already met the requirements for forgiveness. At this juncture, their plans to move forward with spending and saving must wait or be adjusted. As a protective measure, they'll have to build the payments back into their budget for the foreseeable future."
