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A student studies in the Perry-Castaneda Library at the University of Texas at Austin, Feb. 22, 2024.
The Trump administration has made significant changes to the U.S. Department of Education’s website, resulting in the removal of applications for popular student loan repayment plans, which currently affects millions of borrowers.
As a result of this shift, borrowers are unable to access applications for income-driven repayment (IDR) plans and loan consolidation. These applications are essential for those seeking to lower their monthly payments or to qualify for loan forgiveness through IDR plans, including the Public Service Loan Forgiveness program.
This situation stems from a recent ruling by the 8th Circuit Court of Appeals, which halted the implementation of the Biden administration’s new IDR initiative, referred to as SAVE (Saving on a Valuable Education), along with its associated loan forgiveness options for existing IDR plans.
IDR plans were created in the 1990s by Congress to assist borrowers in managing their debt more effectively. They work by capping monthly payments based on a borrower’s discretionary income and eliminating any remaining debt after a set period, generally 20 or 25 years.
According to higher education expert Mark Kantrowitz, over 12 million individuals were enrolled in IDR plans as of September 2024.
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Here’s what to be aware of regarding these changes.
Duration of Application Downtime
Kantrowitz anticipates the downtime for the IDR applications will be temporary, likely lasting a few months.
“I expect it will be a short-term situation while adjustments are made,” he explained.
The Education Department is expected to revise the applications to ensure compliance with the recent court ruling and to possibly eliminate the SAVE plan altogether.
As of yet, the Education Department has not provided a comment on the matter.
Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit organization, echoed that she does not foresee a prolonged wait for the applications to be reinstated.
“It seems the Education Department is diligently working on making the necessary changes,” Mayotte noted.
Consequences of the Application Removal
Unfortunately, there is little that borrowers can do if they wish to enroll in or switch IDR plans, according to Kantrowitz.
Those who need to recertify their IDR plans will also face delays, as Mayotte pointed out. Typically, borrowers must submit income information annually to remain in the plans.
During the legal proceedings related to SAVE, the Biden administration provided forbearance without interest for enrollees. However, experts believe this payment pause is likely nearing its end. In the meantime, borrowers should expect to regain access to different IDR options.
Graduates completing their studies in the spring typically benefit from a six-month grace period before their initial payment is due, which means they will not have to enroll in a repayment plan until November or December—potentially coinciding with the expected reinstatement of the applications.
Alternative Solutions for Unaffordable Loan Payments
The disruption of IDR plans poses a particular challenge for borrowers who are struggling to make their current loan payments without access to more manageable alternatives, as noted by Mayotte.
Borrowers in these situations may wish to reach out to their loan servicer for assistance.
If unemployment is a factor, borrowers can request an unemployment deferment. Those facing other financial hardships might qualify for an economic hardship deferment as well.
Additionally, there are specialized deferments available such as the graduate fellowship deferment, the military service deferment, and the cancer treatment deferment.
If borrowers do not qualify for a deferment, they may consider requesting a forbearance.
Experts recommend that borrowers first determine if they qualify for a deferment since loans typically do not accrue interest under this option, while interest usually accumulates during a forbearance period. Under forbearance, borrowers can pause their payments for up to three years, but may face larger payments when the forbearance ends due to the accrued interest.
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