Millions of people with student loans who are enrolled in a popular repayment plan are now in limbo, with the Department of Education saying it has temporarily paused forgiveness for borrowers in its income-based repayment plan, or IBR.
Such plans offer a double benefit for borrowers by lowering a person’s monthly loan repayment to reflect their income, while also promising to provide forgiveness after a number of years. Specifically, the government can cancel the balance of student loan after people have made payments for at least 20 years.
About 40% of the roughly 33 million people repaying student loans were enrolled in one of the Education Department’s four such repayment plans at the end of 2024, according to data from the National Student Loan Data System and the Government Accountability Office.
But three of those programs had previously been halted by a court ruling, while forgiveness for the roughly 2 million people enrolled in the fourth — IBR — is now also paused.
On Tuesday, Education Department deputy press secretary Ellen Keast told CBS MoneyWatch that the agency “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 court injunctions stem from 2024 lawsuits related to the Biden administration’s flagship student loan repayment plan, called the Saving on a Valuable Education, or SAVE, plan. That initiative, created to fix long-standing issues with the Education Department’s previous income-based plans, proved popular with borrowers, with almost 8 million enrollees at the end of 2024, National Student Loan Data System data shows.
Because the SAVE plan could count toward loan discharges in the IBR program, the Education Department is now temporarily halting forgiveness for enrollees in that plan. The Education Department said the loan discharges will resume at some point, but didn’t provide a timeframe for when that might occur.
What income-driven repayment plans are legally blocked?
Student loan forgiveness under three of the federal government’s income-driven plans — SAVE; Income-Contingent Repayment (ICR); and Pay As You Earn (PAYE) — is currently paused after a court ruled last summer that Congress exceeded its authority in approving those plans.
The legal action last year called into question whether student loan forgiveness was authorized under the federal statute that governs those plans. But the IBR plan was created under a different authority.
When will the Education Department start forgiving loans again?
The Education Department didn’t specify a timeframe in its statement to CBS MoneyWatch. It noted that the SAVE plan allowed forbearances — when loan payments are temporarily halted or reduced — to be counted toward loan forgiveness, but that the rule was halted by the court ruling.
Because of the injunction, the Education Department said it needs to recalculate how many payments made by borrowers should contribute toward repayment.
“Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count,” said Keast of the Education Department.
Should a borrower continue making IBR payments for now?
Yes. Borrowers in the federal IBR plan are eligible to have their student loans canceled after making payments for at least 20 years. However, some people eligible for such forgiveness have yet to see their loans canceled. They should continue making those payments, and the Education Department will eventually refund them, according to the agency.
“For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume,” Keast said.
Borrowers can also request forbearance from their loan servicer. In that case, interest would continue to accrue on any remaining balance.
contributed to this report.
