By Eliza Haverstock, NerdWallet
The U.S. Education Department took down the online and paper applications for all income-driven repayment (IDR) plans on Feb. 21, following the latest legal ruling in a lawsuit against the new IDR plan, Saving on a Valuable Education (SAVE).
“A federal Circuit Court of Appeals issued an injunction preventing the U.S. Department of Education from implementing the SAVE Plan and parts of other income-driven repayment (IDR) plans. The Department is reviewing repayment applications to conform with the 8th Circuit’s ruling. As a result, the IDR and online loan consolidation applications are currently unavailable,” an Education Department spokesperson said.
That means borrowers cannot currently apply for SAVE or any of the other three IDR plans: Paye as You Earn (PAYE), Income-Contingent Repayment (ICR) or Income-Based Repayment (IBR).
The online IDR application was previously unavailable last year from July through September. Paper IDR applications remained as a workaround then, though there were processing delays.
“The risk of harm to borrowers is much higher this time,” says Abby Shafroth, co-director of advocacy at the National Consumer Law Center. The temporary student loan “on ramp” that kept borrowers who missed payments from going into delinquency or default ended on Sept. 30, so borrowers who can’t afford standard payments but are blocked from applying for an IDR plan may now be unfairly penalized, she says.
Here’s who is affected by the IDR application suspension and what options you have.
Borrowers who need to recertify their income for IDR plans
Borrowers on all IDR plans must recertify their income each year — which must be done through the general IDR application. They can’t do so right now.
As a result, some borrowers on IDR plans could be penalized through no fault of their own. Borrowers who miss their recertification deadline risk getting kicked out of their IDR plan and could see their balance balloon with capitalized interest, Shafroth says. (Interest capitalizes when you leave the IBR plan.)
Borrowers with at least one loan in the SAVE plan don’t have to worry about this yet: Their recertification deadlines were previously moved out to at least February 2026, according to the latest Education Department guidance.
Student loan servicers are waiting on the Education Department to provide guidance on recertification for the other three IDR plans, says Scott Buchanan, executive director of the Student Loan Servicing Alliance. However, he expects recertification deadlines to be pushed back for all IDR borrowers.
In the meantime, servicers will work with borrowers who have looming certification deadlines to help them avoid getting penalized, Buchanan says.
“If [borrowers] have a recertification date that is coming up, reach out to the servicer and say, ‘hey, what can I do here?’ Because that’s changing day by day,” Buchanan says. Servicers will contact borrowers once they get government guidance about IBR, ICR and PAYE recertification deadlines, so keep an eye on your inbox, he says.
What you can do
- Call your servicer and check that your contact information is up to date. Ask about your options for recertification if you have an upcoming deadline.
- Wait until more information comes out. In the past, the Education Department has suspended recertification deadlines during periods of uncertainty.
Recent graduates who want to enroll in an IDR plan
Borrowers who just graduated or left college last spring recently entered student loan repayment. Usually, they’d have their choice of student loan repayment plans, including an IDR plan that would cap monthly payments at a certain percentage of discretionary income.
Instead, borrowers must now choose between the default standard 10-year plan, the graduated plan or the extended plan. Payments on these plans can be much higher than IDR payments, especially for recent grads who are still job-seeking or earning an entry-level salary.
What you can do
- Estimate your payments. Use the Education Department’s loan simulator to gauge what your monthly payments could be under the three non-IDR plans: standard, extended and graduated repayment.
- Keep an eye on IDR application news. Apply for an IDR plan when they reopen.
- Ask your servicer for guidance. You can ask for a plan with the lowest monthly payments.
- Consider a deferment. If you don’t have a job yet, you can pause payments with unemployment deferment — but interest will build, increasing the overall amount you owe.
Borrowers who need lower payments
In the past, borrowers who had unaffordable payments relative to their incomes could switch from the standard 10-year repayment plan to an IDR plan to get lower monthly payments — as low as $0 if they earned a small enough income or lost their job.
“If none of the IDR plans are available, then that safety net is removed, which could potentially lead the borrower to head down the path of delinquency and default,” says Karen McCarthy, vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators.
Now, struggling borrowers can only turn to deferments or forbearances to get relief from unmanageable payments. In most cases, interest will build during these pauses, increasing the amount borrowers owe in the future.
“These are temporary stopgaps,” McCarthy says. “They’re not long-term plans. It’s not a repayment plan like the income-driven repayment plans are.”
What you can do:
- Pause payments with a deferment or forbearance. Interest may build, increasing the amount you’ll pay overall, but you won’t default on your debt. A deferment is usually a better choice than a forbearance, because interest is less likely to build, but you’ll need to meet specific conditions to qualify.
- Avoid falling behind on payments. If you simply don’t pay your federal student loans, you could face delinquency or default, which can hurt your credit score and devastate many aspects of your financial life. Request a forbearance or deferment first.
Borrowers who want to consolidate their student loans
Borrowers can still submit paper consolidation applications, but servicers aren’t allowed to process them right now, says Buchanan.
Consolidation allows you to replace multiple federal student loans with a single federal student loan. It’s different from refinancing, which replaces one or more student loans with a single private student loan. If you have older federal loans, like FFELP loans, you must consolidate them before you can access IDR plans or Public Service Loan Forgiveness (PSLF).
However, even though you can apply for consolidation right now doesn’t mean you should. Shafroth suggests borrowers hold off on consolidating until we know whether the Education Department will continue to protect borrowers who consolidate from losing all previous credit they earned toward IDR forgiveness.
What you can do
- Wait until there’s more information. Since you can’t enroll in IDR anyway right now, you may consider waiting until the Education Department clarifies its position about counting pre-consolidation payments toward PSLF and IDR forgiveness.
- Submit a paper consolidation application, if you need to. Print and fill out the PDF version of the consolidation application and mail it directly to your servicer. Expect processing delays.
SAVE borrowers who want PSLF credit
Borrowers on the SAVE plan have been in an interest-free payment pause since the summer, when lawsuits first blocked the plan. Though these SAVE borrowers are getting a break from student loan bills, they also aren’t making progress toward PSLF, which forgives a borrower’s remaining student debt after they spend 10 years working for a qualifying nonprofit employer.
In recent months, SAVE borrowers were able to earn PSLF credit again by switching to a different IDR plan, like PAYE, IBR or ICR. But they no longer have that option.
What you can do
- Switch to the standard repayment plan. Months spent on the standard repayment plan count towards PSLF, but your payments could be much higher than they were on the SAVE plan. Use the Education Department’s loan simulator to estimate your payments. And since the standard plan has a 10-year term, you won’t want to stay on this plan for the entire term — or you could wind up paying off all your debt by the time you reach the 10-year PSLF finish line. Switching to the standard plan may also be a good option if you’re only a few months away from getting forgiveness on PSLF.
- Look into the PSLF Buyback. If you recently hit the 10-year PSLF finish line, you could use the PSLF buyback to get credit for payments missed during the SAVE forbearance.
Other ways to get help
This is an evolving situation for borrowers. For the latest updates and personalized guidance, consider these ways to get student loan help:
- Call your servicer. Your servicer is your go-to contact for any questions about your student loan repayment option. Your assigned servicer’s name appears in your studentaid.gov dashboard. Prepare before calling your servicer and take notes during the call in case any issues arise in the future or you need to make a student loan complaint.
- Reach out to your college’s financial aid department. A financial aid officer from your college can help you walk through your repayment options, even if you left campus years ago, McCarthy says. However, they can’t help you ultimately apply for something like a forbearance or deferment. You have to work with your servicer for that.
- Contact borrower assistance organizations. Vetted nonprofits, like the National Consumer Law Center, offer resources to help borrowers navigate their repayment options.
- State-based student loan ombudsmen. If your state has a student loan ombudsmen office, it may be able to help you with issues or complaints.
Eliza Haverstock writes for NerdWallet. Email: ehaverstock@nerdwallet.com. Twitter: @elizahaverstock.
The article Income-Driven Repayment Applications Shut Down, Student Loan Borrowers Left In the Dark originally appeared on NerdWallet.
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