Why Income-Driven Plan Applications Were Suspended
Student Loans Repayment Update – In February, the Department of Education paused all income-driven repayment (IDR) applications. This followed a federal appeals court ruling in the SAVE plan lawsuit. SAVE is one of four IDR options that tie monthly loans payments to income and family size. Borrowers in these plans may qualify for forgiveness after 20 or 25 years. The department said it needed to update applications and payment rules to comply with the court’s order.
SAVE Plan forbearance Likely to Continue
Acting Under Secretary David Bergeron warned that the SAVE plan is at risk. “Education anticipates that REPAYE/SAVE will soon be enjoined in its entirety,” he wrote in a sworn affidavit. Borrowers enrolled in SAVE remain in forbearance. No payments are due, and no interest accrues. But time in forbearance does not count toward loan forgiveness. It is unclear when this forbearance will end.
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ICR, IBR and PAYE Processing Resumes
Borrowers who applied for ICR, IBR, or PAYE plans will see progress soon. Bergeron’s affidavit states:
“Education directed its servicers to resume placing borrowers that apply for ICR, PAYE and IBR into their respective plans as soon as possible.”
MOHELA, a federal loan servicer, confirms:
- IDR processing has resumed for borrowers who file taxes as single or married filing jointly.
- Other IDR applications remain on hold.
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Full Resumption Expected by May 10, 2025
The department expects all IDR processing to resume by May 10, 2025. This includes borrowers switching from SAVE to ICR, IBR, or PAYE. However, a backlog will delay some. Bergeron noted that servicers must update their systems before processing can fully restart. No completion date for the backlog was given.
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New Spousal Income Treatment for IDR Plans
A key change will affect married borrowers. Beginning May 10, 2025, spousal income may count toward payment calculations under ICR, IBR, and PAYE—even for those filing taxes separately. The department filed an amended declaration on April 15. It clarified that:
- Spouses will be counted in family size for payment amounts.
- Spousal income will no longer be factored for those filing separately.
This change could raise monthly payments for some couples and spark legal challenges.
Processing Forbearance May Count Toward PSLF
IDR applicants will enter a “processing forbearance.” This lasts up to 60 days or until their application is processed. Time in this forbearance counts toward Public Service Loan Forgiveness (PSLF) eligibility. It does not count toward IDR forgiveness. If processing exceeds 60 days, borrowers move into a general forbearance. That time will not count toward any forgiveness program.
PSLF Buyback Option for Eligible Borrowers
Borrowers with 120 months of qualifying employment can use the PSLF Buyback program to count certain forbearance periods toward forgiveness. Key points:
- Applications open only after 120 months of certified service.
- Approved periods must help reach the 120-month threshold.
- Many borrowers face long waits for PSLF Buyback decisions.
- The department provided no timeline for these approvals.
Final Thoughts
These student loans repayment updates offer hope and clarity. Borrowers should track May 10, 2025, for full IDR resumption. They should also review how spousal income rules might affect them. Stay informed to make the best choices for affordable payments and forgiveness.
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