What is Student Loan Forgiveness Under IBR? And What Other Plans Have Been Paused?
Overview
How IBR Works
- Monthly payments are based on a borrower’s income and family size.
- Payments are recalculated annually.
- Borrowers qualify for forgiveness if they haven’t paid off their loans after the end of their repayment term—20 years for loans taken after July 1, 2014; 25 years for those before.
What’s Paused—Plan by Plan
1. Income-Based Repayment (IBR)
- Payments are a percentage of the borrower’s income.
- Forgiveness is granted after 20–25 years of qualifying payments.
- Current Status: Forgiveness has been paused under a Department of Education directive.
- Limits monthly payments to 10% of discretionary income.
- Payments are capped at the amount of a standard 10-year plan.
- Current Status: Paused by a court injunction; not available for new applicants.
- Successor to REPAYE; offers reduced monthly payments.
- Promised quicker forgiveness, especially for low-income borrowers.
- Current Status: Frozen by court injunction. No recertifications allowed; interest resumed on August 1.
- Payments based on the lesser of a fixed amount or 20% of discretionary income.
- Current Status: Paused by court rulings; no new applications being accepted.
Why This Is Happening?
- A federal court (8th Circuit) blocked Biden‑era IDR plans—including SAVE, PAYE, ICR—finding they were not authorized by Congress.
- The Department removed online IDR applications and paused processing, including recertifications.
- IBR remains legally valid, but implementation of forgiveness is paused while the Dept. updates systems and reacts to legal proceedings.
What Borrowers Should Know Now
- IBR still exists, but while forgiveness is paused, your payments won’t disappear—you need to stay informed on new payment rules.
- SAVE borrowers should plan for interest resumption starting August 1, and explore enrolling in IBR or another plan.
- PAYE and ICR users have no recertifications or new admissions happening—consider switching or consulting your servicer.
- New repayment plans like the Repayment Assistance Plan (RAP) are being prepared for rollout later, but not yet active.
Quick Tips
- Stay up‑to‑date with communications from your loan servicer or studentaid.gov.
- If on SAVE or PAYE/ICR, consider manually submitting recertification if your anniversary date is near.
- Monitor interest accrual—some paused interest may restart after August 1.
- If eligible, consider switching into IBR, the only plan still statutorily authorized and currently open.
Bottom Line
- IBR forgiveness is paused, but IBR is still the only active income-driven plan.
- PAYE, SAVE, and ICR plans are all paused or frozen by court action.
- Upcoming new plans like RAP may reshape repayment, but no new options are available yet.
For now, borrowers should proactively track recertifications, watch for interest resumption, and explore IBR enrollment or consult financial advisors for detailed paths forward.