Latest news with #IncomeBasedRepayment
3 days ago
- Business
With student loan forgiveness under IBR plan paused, what it means for millions of borrowers
The Department of Education has paused the Income Based Repayment plan (IBR) in another significant move that alters the student loan repayment process for millions of Americans. The IBR plan cancels loan debt in full for borrowers who've made 300 monthly payments -- or about 25 years of payments. After that 25-year period, the plan cancels any outstanding balances and considers the borrowers' repayment obligation to be satisfied. Student loan advocates tell ABC News that borrowers are still being billed when their student loan should already be cancelled under the plan. "As of today, if you have been in debt for 25 years, you have a right under federal law to get your debt canceled, and the government is not honoring that law," Student Borrower Protection Center (SBPC) Executive Director Mike Pierce said. This plan was statutorily mandated under the Higher Education Act and encouraged by the Trump administration's Education Department while the agency launches its new Repayment Assistance Plan. The recent pause was not announced but is listed on a Frequently Asked Questions page of the Federal Student Aid site. It is now causing worry and confusion for borrowers who have been left in the dark, according to student loan experts. Pierce said the government suspended the forgiveness plan for reasons that the administration hasn't explained. "We don't know how many people are affected by it, we don't know how many people will be affected by it in the future, we don't know why it's happening," Pierce told ABC News. "We're worried that this is just the Trump administration deciding that its judgment is more important than the judgment of Congress, and it's going to do whatever the hell it wants," Pierce added. ABC News has reached out to the Department of Education for comment on the communication of the IBR plan pause. Under the recent pause, IBR accounts are being audited for the number of qualifying payments it has received. Abby Shafroth, managing director of advocacy at the National Consumer Law Center (NCLC), called the pause both surprising and concerning for borrowers as many have met the qualifying number of payments, but say that they're still getting billed. "It has sort of quietly come out that [IBR is] still not giving people cancellation," Shafroth told ABC News. Shafroth described the situation as a "mess." She noted the IBR plan is the one program that the current Education Department has encouraged borrowers to enroll in, has said will provide debt forgiveness and that Congress clearly established and mandated. "The Department of Education really has to own this and fix it," Shafroth said. "If they don't fix it, it's both going to break down trust and it's going to cost a lot of people more money. I don't know how many people, but it's going to cost people more money," she said. According to Shafroth, borrowers will keep getting billed on debts that they no longer owe and, as a result, they could end up having to pay large tax bills in their 2026 tax year. IBR is one of four Income Driven Repayment plans that takes a percentage of your income for monthly payments, including the Pay As You Earn (PAYE), Income Contingent Repayment and the Savings on a Valuable Education or "SAVE" plans. Borrowers on the Biden-era SAVE plan -- about 7.7 million people -- will have interest charges return on Aug. 1 at the same time the Education Department said it's complying with a federal court injunction that blocked implementation of the plan. The interest restart comes as President Donald Trump recently signed into law his signature domestic policy agenda, the One Big Beautiful Bill Act, which included a provision to terminate all current student loan repayment plans -- such as SAVE and other IDRs -- for loans disbursed on or after July 1, 2026. The plans will be replaced with two separate repayment plans: a standard repayment plan and the Repayment Assistance Plan, a new income-based repayment plan. However, these repayment plans are currently affected by legal challenges, according to a release from the department. The Education Department's recent student loan adjustments signal the Trump administration's shift away from former President Joe Biden's debt forgiveness plans. The department will create a Reimagining and Improving Student Education (RISE) Committee to address its upcoming changes. Secretary of Education Linda McMahon said she wants to simplify the overly complex system. Contrary to borrower fears, McMahon told ABC News her agency's reforms aren't meant to be "punitive" nor does she want to see borrowers defaulting on loans. "When you are in default on a loan, you can't buy a house, you can't buy a car, so call [the department]," McMahon said, adding, "Just make sure that you are on the right repayment plan." "Be proactive and get back into one of the payment plans," she said. Meanwhile, Shafroth said this pause in the IBR plan potentially makes borrowers more distrustful and, in turn, further divides the borrower and the government. "It really alienates borrowers, and they stop trusting the government and stop, in some cases, repaying, or, you know, being responsive on their loans," she said. SBPC's Pierce warned this is a legal matter that borrowers are entitled to having resolved.
CNET
5 days ago
- Business
- CNET
Yes, You Can Still Get Student Loan Forgiveness With IBR. What You Need to Know
Zooey Liao/CNET/Getty Images Student loan forgiveness options have dwindled considerably during President Donald Trump's second administration, but the Department of Education says forgiveness through Income-Based Repayment isn't going away. However, it is on pause. The Federal Student Aid website says IBR forgiveness is on hold while the Education Department retools its system to recalculate eligible payments. "IBR forgiveness will resume once those updates are completed," said an FAQ section updated July 9. The key question is how the Education Department counts payments made under the Saving on a Valuable Education repayment plan, which was struck down by the courts earlier this year. Borrowers on the IBR can have the payments they made on other income-driven repayment plans (including SAVE, PAYE and ICR) count toward their IBR forgiveness. But one of SAVE's features allowed borrowers to count months in certain types of forbearance when they didn't make payments, according to student loan expert Mark Kantrowitz. "The decision of the 8th Circuit Court of Appeals blocks these additional deferments and forbearances from counting toward forgiveness," he said in an email. "So the US Department of Education will need to make changes to the qualifying payment counts." IBR is an income-driven student loan repayment plan that adjusts monthly payments based on borrowers' income. Eligible student loan borrowers can receive forgiveness after 20 or 25 years' worth of payments, depending on when they took out their loan. It's currently the only repayment plan available that offers a path to forgiveness to existing borrowers. We'll explain what could happen with IBR, and what you should do if you're waiting for student loan forgiveness. Read more: SAVE Student Loan Borrowers: You Don't Have to Move to IBR by Aug. 1, but You May Want to: Here's How to Decide Is student loan forgiveness going away? Multiple paths to student loan forgiveness have disappeared in the past year. ICR, PAYE and SAVE plans are no longer eligible for forgiveness directly, following the court ruling in February that Congress exceeded its authority by approving them. Since IBR was created under a different rule, it wasn't affected by the court's ruling. Forgiveness through IBR should be safe for now. But it's understandable that borrowers -- deciphering confusing and misleading information as they wait for forgiveness -- may be skeptical of the Education Department's reassurances that IBR forgiveness is coming back. After February's court decision, the application for income-driven repayment plans was removed from the federal student loan site, causing concern among borrowers. But it was made available again a month later with revisions. This could, in theory, be a similar scenario, where the IBR forgiveness will resume at a later date. When will IBR forgiveness come back? Though the Education Department calls it "temporary," there's no indication how long the IBR pause will last. With a backlog of 1.5 million applications for repayment plans and huge swaths of the Department of Education staff wiped out, it's unclear how long it could take to resolve the payment recalculation. The Washington Post reported that several student loan servicers have said the Education Department hasn't asked them to process loan forgiveness for any borrowers since mid-January. "This not only affects the loan servicers, but also the US Department of Education, since final approval of loan forgiveness is handled in-house," Kantrowitz said. The Department of Education didn't immediately respond to a request for comment. Are there other options for forgiveness besides IBR? Besides IBR, existing borrowers will have another option next year under the new Republican-backed law passed earlier this month: the Repayment Assistance Plan. The new Repayment Assistance Plan could offer slightly lower monthly payments for some borrowers, but the plan calls for 30 years of qualifying payments before loans are forgiven, compared with the 20 to 25 years under the current IBR. So you'll end up paying more in interest over time. Anyone who takes out student loans after July 2026 will have just two repayment options: RAP and the standard repayment plan. Should I still apply for IBR if I'm a SAVE borrower? Millions of borrowers enrolled in SAVE will start accruing interest on their loans again starting Aug. 1. However, payments remain on hold while your loans are in a general forbearance, which could last until mid-2026. You aren't required to switch plans until then, although interest will pile up during that time. However, if you decide to switch, you can compare other income-driven repayment plan options using the Federal Student Aid loan simulator. You can apply to switch to an IDR on the FSA website to restart payments that count toward forgiveness. If you do apply for a new plan, expect the application to take several months to process due to the backlog, Kantrowitz said. The Department has been encouraging SAVE borrowers to switch to IBR, which could mean an even higher volume of applicants as the Aug. 1 deadline approaches. What should I do if I'm enrolled in an IBR? If you're enrolled in an IBR and near or past the payment threshold to be eligible for loan forgiveness, Kantrowitz advises you to continue making payments until you receive notification that your loans have been forgiven, which should happen automatically. "Any excess payments will be refunded," he said. "They could switch into a general forbearance, but there's a risk that they've counted their qualifying payments incorrectly. It is better to just continue making payments."
CNN
6 days ago
- Business
- CNN
The Department of Education has paused certain student loan forgiveness. Here's what you need to know
The US Department of Education has halted the cancellation of student loans in Income-Based Repayment plans, prompting concern among borrowers that their loans will not be forgiven anytime soon. The department posted a notice of the pause in an FAQ on its Federal Student Aid website earlier this month, saying that it needs to address a federal court order that affects income-driven repayment plans. 'Currently, IBR forgiveness is paused while our systems are updated to accurately count months not affected by the court's injunction. IBR forgiveness will resume once those updates are completed,' the department wrote. The department noted that forgiveness in other income-driven repayment plans are paused, but it will continue to 'process loan forgiveness for the IBR Plan, which was separately enacted by Congress' in the future. The pause comes at a time of major change for the nation's student loan system that has rattled some borrowers. Interest will start accruing on August 1 for millions of borrowers in Saving on a Valuable Education (SAVE) plans, a Biden-era income-driven repayment option that has been blocked by the federal court order, even as payment remain halted. And President Donald Trump's 'big, beautiful bill' contains a major overhaul of student loan repayment plans and borrowing rules. The roughly 2 million borrowers in IBR plans are eligible to have their loans forgiven after either 20 or 25 years of payments, depending on when the loans were taken out. But calculating whether borrowers have made enough payments to qualify for forgiveness has been an issue for several years. Also, the Biden administration made several changes to the IBR plan forgiveness program, including counting the months that loan payments were deferred for economic hardship reasons or paused in forbearance toward payment requirement. The court's order affected certain of the Biden administration's regulatory changes that pertain to the IBR plans, including the expanded set of deferments and forbearances that count toward forgiveness, said Mark Kantrowitz, a longtime student loan expert. Borrowers, however, are worried that the Trump administration — which has not been supportive of loan forgiveness programs in the past — may 'slow walk' the loan discharges, Kantrowitz said. They must continue repaying their loans until the Department of Education determines they have met the criteria to have their loans discharged. 'Borrowers who qualify for forgiveness want to receive their forgiveness,' he said. The department says that it needs to temporarily suspend the IBR plan forgiveness program to implement the court ruling. 'Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count,' Ellen Keast, the agency's deputy press secretary, said in a statement to CNN. 'For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume.' While the department did not respond to CNN's question about when IBR plan forgiveness will resume, Scott Buchanan, executive director of the Student Loan Servicing Alliance, said he doesn't think the pause will last long. Still, another reason eligible borrowers are concerned about the pause is that loans canceled after January 1 are set to be counted as income for tax purposes, said Aissa Canchola Banez, policy director at the Student Borrower Protection Center, an advocacy group. That's because the Republican-led Congress did not extend a Biden-era provision that made such cancellations tax exempt and is scheduled to expire at year's end. 'This delay can force folks to ultimately get to that date in which they could potentially see a tax bill,' she said. The department, which has laid off a sizable number of its staff, is already contending with a large backlog of roughly 1.5 million applications from borrowers seeking to switch into different income-driven repayment plans, Kantrowitz said.
CNN
6 days ago
- Business
- CNN
The Department of Education has paused certain student loan forgiveness. Here's what you need to know
The US Department of Education has halted the cancellation of student loans in Income-Based Repayment plans, prompting concern among borrowers that their loans will not be forgiven anytime soon. The department posted a notice of the pause in an FAQ on its Federal Student Aid website earlier this month, saying that it needs to address a federal court order that affects income-driven repayment plans. 'Currently, IBR forgiveness is paused while our systems are updated to accurately count months not affected by the court's injunction. IBR forgiveness will resume once those updates are completed,' the department wrote. The department noted that forgiveness in other income-driven repayment plans are paused, but it will continue to 'process loan forgiveness for the IBR Plan, which was separately enacted by Congress' in the future. The pause comes at a time of major change for the nation's student loan system that has rattled some borrowers. Interest will start accruing on August 1 for millions of borrowers in Saving on a Valuable Education (SAVE) plans, a Biden-era income-driven repayment option that has been blocked by the federal court order, even as payment remain halted. And President Donald Trump's 'big, beautiful bill' contains a major overhaul of student loan repayment plans and borrowing rules. The roughly 2 million borrowers in IBR plans are eligible to have their loans forgiven after either 20 or 25 years of payments, depending on when the loans were taken out. But calculating whether borrowers have made enough payments to qualify for forgiveness has been an issue for several years. Also, the Biden administration made several changes to the IBR plan forgiveness program, including counting the months that loan payments were deferred for economic hardship reasons or paused in forbearance toward payment requirement. The court's order affected certain of the Biden administration's regulatory changes that pertain to the IBR plans, including the expanded set of deferments and forbearances that count toward forgiveness, said Mark Kantrowitz, a longtime student loan expert. Borrowers, however, are worried that the Trump administration — which has not been supportive of loan forgiveness programs in the past — may 'slow walk' the loan discharges, Kantrowitz said. They must continue repaying their loans until the Department of Education determines they have met the criteria to have their loans discharged. 'Borrowers who qualify for forgiveness want to receive their forgiveness,' he said. The department says that it needs to temporarily suspend the IBR plan forgiveness program to implement the court ruling. 'Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count,' Ellen Keast, the agency's deputy press secretary, said in a statement to CNN. 'For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume.' While the department did not respond to CNN's question about when IBR plan forgiveness will resume, Scott Buchanan, executive director of the Student Loan Servicing Alliance, said he doesn't think the pause will last long. Still, another reason eligible borrowers are concerned about the pause is that loans canceled after January 1 are set to be counted as income for tax purposes, said Aissa Canchola Banez, policy director at the Student Borrower Protection Center, an advocacy group. That's because the Republican-led Congress did not extend a Biden-era provision that made such cancellations tax exempt and is scheduled to expire at year's end. 'This delay can force folks to ultimately get to that date in which they could potentially see a tax bill,' she said. The department, which has laid off a sizable number of its staff, is already contending with a large backlog of roughly 1.5 million applications from borrowers seeking to switch into different income-driven repayment plans, Kantrowitz said.
Yahoo
22-04-2025
- Business
- Yahoo
New York services offer help with repaying student loan debt
NEW YORK (PIX11) – With student loan collections set to restart on May 5 and more than half New York college graduates in debt, New York State offers some loan forgiveness options for residents. According to the Institute for College Access and Success, about 54 percent of New York graduates have student loan debt, with an average load of $30,951 in 2019-20. Student loans in default to be referred to debt collection, Education Department says The state currently offers seven loan forgiveness programs, three of which are currently accepting applications and others with application windows opening soon. You might be eligible for this loan forgiveness program if you graduated from a college or university headquartered in New York State within the last two years and have enrolled in a federal Income Based Repayment plan. More Local News Potential applicants for this plan should be paying 10% of their discretionary income and have an adjusted gross income of less than $50,000. Additionally applicants should have graduated from a high school located in New York State or received an equivalent diploma from an approved program. Those interested in this program should apply within two years of receiving an undergraduate degree and should have a primary work location in New York State, if employed. More: Latest News from Around the Tri-State For more information and to apply click here. This program for registered licensed nurses in New York will accept applications until May 16. Those interested in applying should be qualified as nursing faculty or adjunct clinical faculty, be employed at a nursing school located in New York and be state resident for 12 continuous months. This program will award up to $40,000 in a lifetime, paid out as $8,000 annually. Other programs such as the Young Farmers Loan Forgiveness Incentive Program have applications closing soon. Below are details on other loan forgiveness programs with applications that will open soon. District Attorney and Indigent Legal Services Attorney Loan Forgiveness Program (DALF) – Opens July Licensed Social Worker Loan Forgiveness (LSWLF) Program – Opens July Dominique Jack is a digital content producer from Brooklyn with more than five years of experience covering news. She joined PIX11 in 2024. More of her work can be found here. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
