Department of Education Suspends Student Loan Forgiveness Under IBR

The Department of Education’s suspension of student loan forgiveness under the Income-Based Repayment (IBR) plan has raised concerns among borrowers who have been making payments for 20 or 25 years and are eligible for loan discharge. This pause, attributed to system updates, comes as a surprise since the IBR plan is not directly affected by the legal challenges and court injunctions impacting other income-driven repayment plans like SAVE, PAYE, and ICR.

IBR was established by Congress, explicitly authorizing student loan forgiveness after the specified repayment period. The department's updated guidance in July confirmed that while forgiveness under SAVE, PAYE, and ICR is paused due to the plans not being created by Congress, IBR should generally still be processed. However, the recent suspension contradicts this guidance.

A former official from the Office of Federal Student Aid suggested that the department might be violating the law by blocking debt relief under IBR. This official noted that eligible borrowers were not having their loans canceled, a process that has been paused since July 2024, despite the statutory obligation to do so. The department is also reportedly having difficulty updating qualifying student loan forgiveness payment counts.

The Department of Education vaguely explained that the suspension is related to updating systems to accurately count months not affected by the court’s injunction directed at the SAVE plan. This explanation is tied to a federal appeals court ruling that expanded the injunction, impacting regulations indirectly affecting other income-driven repayment plans, including IBR.

The suspension of IBR loan forgiveness adds to the turmoil in the federal student loan repayment system, which is already experiencing significant disruptions. Over 1.5 million income-driven repayment applications are stuck in a backlog. The department has encouraged borrowers in the SAVE plan to transition to the IBR plan, but the current suspension complicates this transition.

The Department of Education states that the suspension is due to system updates needed to accurately count months not affected by the court’s injunction directed at the SAVE plan.

No, the IBR plan was created separately by Congress and is not directly subject to the legal challenges affecting SAVE, PAYE, and ICR.

Borrowers can continue making payments under IBR, hoping for a refund of excess payments once their loans are discharged, or request a forbearance to suspend payments while they wait for a discharge. However, interest will continue to accrue during the forbearance period.

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