{"id":13585,"date":"2025-04-15T22:17:14","date_gmt":"2025-04-15T22:17:14","guid":{"rendered":"https:\/\/finderica.com\/?p=13585"},"modified":"2025-04-15T22:17:14","modified_gmt":"2025-04-15T22:17:14","slug":"major-updates-on-student-loan-repayment-plan-processing-unveiled-by-department-of-education","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=13585","title":{"rendered":"Major Updates On Student Loan Repayment Plan Processing Unveiled By Department Of Education"},"content":{"rendered":"\n
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WASHINGTON, DC – MARCH 12: The headquarters of the Department of Education are shown March 12, 2025 … More<\/span> in Washington, DC. The Department of Education announced on April 11 that processing for income-driven repayment plans for federal student loan borrowers would be resuming. (Photo by Win McNamee\/Getty Images)<\/span><\/p>\n

<\/fbs-accordion>Getty Images<\/small><\/figcaption><\/figure>\n

The Trump administration has released several major updates on the processing of income-driven repayment plan requests, providing borrowers who are pursuing affordable payments and eventual student loan forgiveness with critical new insights on what to expect in the coming weeks.<\/p>\n

The Department of Education took down applications for income-driven repayment plans in February and suspended all processing following a ruling by a federal appeals court in a legal battle over the SAVE plan. SAVE is one of four current income-driven repayment options that offer borrowers affordable monthly payments tied to their income and family size, historically with the possibility of eventual student loan forgiveness after 20 or 25 years in repayment. The department had argued that IDR processing needed to be temporarily suspended in order for officials to update the application and payment calculation procedures to comply with the new court order.<\/p>\n

The American Federation of Teachers, a national labor union of educators, filed a lawsuit against the Trump administration in March, arguing that the effective shutdown of the entire income-driven repayment plan system was unlawful. The AFT sought a temporary restraining order, asking a court to force the department to resume processing IDR requests for the ICR, IBR, and PAYE plans, which were not directly enjoined by the federal appeals court.<\/p>\n

In response to the AFT\u2019s motion for a temporary restraining order, on Friday, a top Department of Education official filed a sworn affidavit with the court providing key details on how and when the department and its contracted loan servicers anticipate resuming income-driven repayment plan processing and placing student loan borrowers into the repayment plans they have requested. Here are the details.<\/p>\n

Student Loan Payments Under SAVE Plan Not Expected To Resume<\/h2>\n

The Department of Education appeared to confirm what many observers have already suspected: Student loan payments under the SAVE plan are not expected to resume anytime soon (if ever), and the program appears likely to ultimately get struck down.<\/p>\n

\u201cEducation anticipates that REPAYE\/SAVE will soon be enjoined in its entirety,\u201d said David Bergeron, acting undersecretary of education in a declaration<\/a> filed on Friday.<\/p>\n

This likely means that federal student loan borrowers who had enrolled in the SAVE plan, are currently in a forbearance due to the ongoing injunction, and have not applied to change to a different repayment plan, will probably remain in that forbearance for now. While no payments are due during the forbearance and no interest is accruing, the time will continue to not count toward student loan forgiveness for IDR programs or Public Service Loan Forgiveness. It is not yet clear when the forbearance will end.<\/p>\n

Processing Is Partially Resuming For Student Loan Borrowers Who Applied For The ICR, IBR And PAYE Plans<\/h2>\n

For federal student loan borrowers who have applied to enroll in one the other three income-driven plans \u2014 ICR, IBR, or PAYE \u2014 Acting Under Secretary Bergeron indicated that processing is already starting to resume.<\/p>\n

\u201cEducation directed its servicers to resume placing borrowers that apply for ICR, PAYE and IBR into their respective plans as soon as possible,\u201d reads the declaration. This seems to be corroborated by at least one student loan servicer.<\/p>\n

\u201cIDR processing has resumed for IBR, PAYE, and ICR applications for borrowers who file taxes as single, or married with no income,\u201d says a new statement on the website for MOHELA, one of the Department of Education\u2019s contracted loan servicers. \u201cAll other IDR applications will remain on hold at this time.\u201d<\/p>\n

IDR Processing Is Expected To Resume For All Other Student Loan Borrowers In May<\/h2>\n

While IDR application processing is slowly ramping up, Bergeron indicated that the Department of Education expects processing to fully resume for borrowers who applied for ICR, IBR, and PAYE within weeks.<\/p>\n

\u201cAt present, based on information provided by servicers, Education expects that servicers will be able to resume doing so by May 10, 2025,\u201d says the declaration. This would also include borrowers in the SAVE forbearance who have applied to switch to one of the other IDR plans, which may be required for those who wish to get back on track for eventual student loan forgiveness under either IDR or the PSLF program.<\/p>\n

\u201cEducation expects that servicers will start placing borrowers currently enrolled in SAVE that are applying for different IDR plans into the plan of their choice by May 10, 2025,\u201d says the declaration.<\/p>\n

However, there likely will be significant delays due to application backlogs. Bergeron did not provide any estimates on what borrowers should expect in terms of a timeframe.<\/p>\n

\u201cEducation does not currently have an estimated date for when servicers will have completed processing the backlog of IDR applications,\u201d continues the declaration. \u201cThis timeline is due to the servicers\u2019 internal procedures. Specifically, before servicers can begin to process applications, they must update the processing rules in their systems according to the terms of their contracts with Education.\u201d<\/p>\n

Possible Complications For Married Student Loan Borrowers<\/h2>\n

One significant update the Department of Education provided may be alarming for some married borrowers. Bergeron indicated that once processing resumes in May, the department will factor in spousal income for the payment calculation under ICR, IBR, and PAYE, regardless of their marital tax filing status.<\/p>\n

\u201cEducation expects that by May 10, 2025, servicers will implement the treatment of spousal information for ICR, PAYE and IBR such that married borrowers filing separate income tax returns or separated from their spouses will have spousal income counted for the purposes of calculating monthly payment amount under IDR plans,” reads the declaration.<\/p>\n

While Bergeron indicated that this is required by the recent federal appeals court order, nothing in that court\u2019s order explicitly instructs the Department of Education to count spousal income for borrowers who file taxes as married-filing-separately. Furthermore, federal statute makes clear \u2014 particularly for the IBR plan \u2014 that federal student loan borrowers who file taxes separately from their spouse \u201cshall\u201d have their payments calculated based on their own individual income. If the Department of Education follows through with this, monthly payments for some married student loan borrowers may substantially increase, which could lead to potential legal challenges.<\/p>\n

Processing Forbearance Can Count Toward Student Loan Forgiveness For Some Borrowers<\/h2>\n

The Department of Education expects to place borrowers in a processing forbearance once servicers begin reviewing borrowers\u2019 IDR application requests. The processing forbearance period may count toward student loan forgiveness, but it depends on the specific program.<\/p>\n

\u201cOnce borrowers apply for any IDR plan, they will be placed in a processing forbearance under 34 CFR \u00a7 685.205(b)(9) for up to 60 days, or until the processing of their application is complete, whichever is earlier,\u201d said Bergeron in the declaration. \u201cPeriods of time spent in processing forbearance will count towards Public Service Loan Forgiveness (\u201cPSLF\u201d) eligibility under 34 CFR \u00a7 685.219(c)(2)(v)(H). Those periods will not, however, count towards eligibility for forgiveness due to a borrower\u2019s enrollment in an IDR plan.\u201d<\/p>\n

Federal student loan borrowers whose IDR application has not been processed by the end of the 60-day processing forbearance period will be moved into a general forbearance, says the declaration. That type of forbearance would not count toward student loan forgiveness for either IDR or PSLF.<\/p>\n

PSLF Buyback Could Be An Option For Some Borrowers Pursuing Student Loan Forgiveness, With Caveats<\/h2>\n

Bergeron confirmed that borrowers pursuing student loan forgiveness through PSLF can potentially get non-qualifying forbearance periods (such as the SAVE plan forbearance, and the general forbearance that would follow a processing forbearance) counted through the PSLF Buyback program.<\/p>\n

\u201cBorrowers with 120 months of qualifying employment can use the Public Service Loan Forgiveness Buyback program under 34 CFR \u00a7 685.219(g)(6) to count periods of administrative and processing forbearance towards forgiveness,\u201d said Bergeron in the declaration.<\/p>\n

However, PSLF Buyback has specific eligibility rules. Borrowers can only apply once they have 120 months of certified qualifying PSLF employment, and the period subject to buyback, if approved, must allow borrowers to reach the 120-month threshold for student loan forgiveness under the program. As a practical matter, many borrowers have been waiting for months for a response from the Department of Education after submitting PSLF Buyback requests. Bergeron\u2019s declaration is silent as to when \u2014 or whether \u2014 these borrowers can expect to receive a decision.<\/p>\n<\/div>\n

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WASHINGTON, DC – MARCH 12: The headquarters of the Department of Education are shown March 12, 2025 … More in Washington, DC. The Department of Education announced on April 11 that processing for income-driven repayment plans for federal student loan borrowers would be resuming. (Photo by Win McNamee\/Getty Images) Getty Images The Trump administration has<\/p>\n","protected":false},"author":1,"featured_media":12795,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[1836,1835,240,148,310,3270,2167,308,5634,309],"class_list":{"0":"post-13585","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-department","9":"tag-education","10":"tag-loan","11":"tag-major","12":"tag-plan","13":"tag-processing","14":"tag-repayment","15":"tag-student","16":"tag-unveiled","17":"tag-updates"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/13585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13585"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/13585\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/12795"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}