Overview

Following a federal court ruling in late February 2025, the Department of Education announced a temporary pause on applications for all Income-Driven Repayment (IDR) plans. This suspension affects Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and the Saving on a Valuable Education (SAVE) plan, with implications for millions of borrowers managing student loan debt.

Understanding Income-Driven Repayment Plans

IDR plans make student loan payments manageable by basing monthly payments on borrower income and family size. These plans typically extend repayment periods to 20 or 25 years, with remaining balances potentially forgiven afterward.

Primary IDR Plans:

  • Income-Based Repayment (IBR): Monthly payments capped at 10-15% of discretionary income, with forgiveness after 20-25 years of qualifying payments
  • Income-Contingent Repayment (ICR): Payments set at 20% of discretionary income, adjusted to income with forgiveness after 25 years
  • Pay As You Earn (PAYE): Payments limited to 10% of discretionary income, with forgiveness after 20 years
  • Saving on a Valuable Education (SAVE): Caps monthly payments as a percentage of discretionary income with loan forgiveness after a set period

The Court’s Decision and Impact

The 8th U.S. Circuit Court of Appeals upheld a preliminary injunction against the SAVE plan, prompting the Department to suspend applications for all IDR plans. The suspension is expected to last at least three months, extending through May 2025.

Implications for Borrowers

Current Participants: Borrowers already enrolled in IDR plans will continue repayments under existing terms, though income recertification and plan adjustments may face delays.

New Applicants: Those seeking to apply for IDR plans face suspension delays. Alternative repayment options like the Standard or Graduated Repayment Plans warrant consideration during this period.

Public Service Workers: Those pursuing Public Service Loan Forgiveness should review updated eligibility criteria to confirm employment qualifies.

Recommendations for Borrowers

  • Monitor the Federal Student Aid website and Department of Education communications for updates
  • Contact loan servicers to discuss individual situations and available options
  • Consult financial advisors for personalized debt management strategies