Students graduate from Oregon State University. (Courtesy of Oregon State University)
More than 12 million Americans who took out loans from the U.S. Department of Education to attend college are now stuck in limbo about whether or not they’ll get to participate in income-driven repayment plans that have served millions of Americans before them.
On March 7, Oregon’s U.S. Sens. Ron Wyden and Jeff Merkley, both Democrats, joined 23 other U.S. Senate Democrats from across the country demanding to know why, on Feb. 24, applications for repayment plans that help student borrowers manage payments were abruptly taken off the U.S. Department of Education’s website.
In a letter authored by Wyden and U.S. Sen. Bernie Sanders, D-Vermont, and cosigned by the other senators to Linda McMahon, the agency’s secretary, they wrote that this was done “without warning, without Congressional notification, and without clear guidance for borrowers on what they should do next or expect in the future.”
In February, the U.S. Court of Appeals for the Eighth Circuit in Missouri upheld and expanded a temporary injunction pausing the Saving on a Valuable Education, or SAVE plan, that has been on hold since a legal battle brought by Republican states attorneys general in 2024. But the senators asked McMahon why applications for three other income-driven repayment programs not involved in litigation have also been removed from the education agency’s site.
“Borrowers have relied on many of these plans for decades and this sudden and reckless action means millions of borrowers have fewer repayment options available and are unsure of what to do in order to manage their debt,” they wrote.
Aissa Canchola Banez, policy director at the Washington, D.C.-based nonprofit Student Borrower Protection Center said the ruling is being misinterpreted and called it “cruel” in a news release.
“To be clear, this is not what the Eighth Circuit ordered and the Trump administration is using this ruling to inflict massive economic pain on millions of working families with student debt,” she said.
The federal education department is reviewing repayment applications to conform with the court ruling, according to an email attributed to an unnamed education department spokesperson.
“In the meantime, borrowers can still submit a paper loan consolidation application,” according to the spokesperson.
Three income-driven repayment plans offered by the U.S. Education Department are affected by the most recent decision to pull applications, as are applications for loan consolidation. Loan consolidation has to happen before borrowers can access any of the federal loan forgiveness plans.
Effected plans include the Pay As You Earn, or PAYE, program and the Income-Contingent and Income-Based repayment plans. Each of these plans limits monthly repayments to a specific percentage of a borrower’s discretionary income, and each sets out a term of repayment that ends with loan forgiveness after 20 to 25 years.
More than 12 million student loan borrowers rely on the plans, according to U.S. Department of Education data, and more than 1 million borrowers applied for income-driven repayment plans that were still processing as of the Feb. 24 application take down, according to Wyden spokesperson Hank Stern.
“The department has not yet provided guidance about that,” Stern said. “Also because the department has closed all online forms, borrowers trying to manage their IDR plans are now unable to do so through the FSA (Federal Student Aid) website.”
The changes so far have not impacted the Public Service Loan Forgiveness program, available to borrowers who work for government or nonprofit organizations and do public service work, and which forgives loans remaining after the borrower has made 120 qualifying payments.
President Donald Trump recently issued an executive order attempting to limit who qualifies for such forgiveness.
The SAVE plan, at issue in litigation brought by Republican attorneys general and frozen since June 2024, made it easier for low-income borrowers to meet monthly repayment terms, requiring they pay nothing if their annual income is $30,000 or less. It also limited the amount of interest that could be collected on loans and forgave loans after 10 to 20 years based on their size. The Republican attorneys general ordered this was beyond the authority of the education agency.
The first income-driven repayment programs were passed by Congress in 2007 and signed by former U.S. President George W. Bush, a Republican.
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