- Trump’s Education Department removed online applications for income-driven student-loan repayment plans.
- The move was in response to a federal court upholding a pause on the SAVE plan.
- This means that borrowers cannot access plans intended to give them more affordable monthly payments.
Student-loan borrowers lost access to online applications for repayment plans meant to allow for affordable monthly payments.
In response to a federal court ruling that upheld a preliminary injunction on the SAVE student-loan repayment plan, President Donald Trump’s Education Department removed online income-driven repayment applications from Federal Student Aid’s website.
A three-sentence notice on FSA’s website stated: “A federal court issued an injunction preventing the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) Plan and parts of other income-driven repayment (IDR) plans. As a result, the IDR and online loan consolidation applications are temporarily unavailable. Borrowers can still submit a paper loan consolidation application.”
Income-driven repayment plans, established by Congress in 1993, give borrowers monthly payments intended to be affordable based on the income they receive. After 20 or 25 years of payments, the plans allow for forgiveness of borrowers’ remaining balances. Many borrowers seeking relief through the Public Service Loan Forgiveness plan, which cancels student debt for government and nonprofit workers after 10 years of qualifying payments, used income-driven repayment plans.
The remaining available repayment plans include the standard 10-year repayment plans, which typically have the highest monthly payments.
The Education Department did not immediately respond to a request for comment from Business Insider on the impact of the application pause and what borrowers should do in the meantime.
The removal of the income-driven repayment plan applications follows a tumultuous legal battle surrounding former President Joe Biden’s SAVE plan. The plan was intended to give borrowers cheaper monthly payments with a shorter timeline for loan forgiveness.
A group of GOP-led states filed a lawsuit last summer to block the plan, and 8 million enrolled borrowers have been in an interest-free forbearance since then as the legal process continues. A federal court most recently upheld a pause on the plan, sending it back to a district court to issue a final ruling.
Guidance from the Education Department on January 15 said that borrowers enrolled in SAVE will not have to make payments until December at the earliest while student-loan servicers update payment plans for impacted borrowers.
Persis Yu, deputy executive director and managing counsel at the advocacy group Student Borrower Protection Center, said in a statement that “shutting down access to all income-based repayment plans is not what the 8th Circuit ordered.”
“This was a choice by the Trump Administration and a cruel one that will inflict massive pain on millions of working families,” Yu said.
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