In a significant turn of events affecting millions of borrowers, the U.S. Department of Education has halted the ability to have student loan forgiveness using Income-Based Repayment (IBR) and some other income-driven repayment (IDR) plans, effective July 21, 2025. The pause came after a federal court found the legal authority for forgiving loans under the 1993 Higher Education Act questionable, and it leaves the millions of borrowers who are in the popularly used plans IBR, PAYE, SAVE, and ICR, with no possible forgiveness credit until further notice and also blocks access to any online applications or recertification portals to gain entry for certain loan relief opportunities. This major action creates uncertainty for a great number of borrowers, as well as creating financial anxiety and a very real concern about the future of loan relief, and the actions and options these borrowers face.
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Why Was Student Loan Forgiveness Suspended?
Here are some of the major reasons why the student loan forgiveness program was suspended:
The Suspension Resulted from a Legal Challenge
The suspension began with a ruling from a federal court, which questioned whether the U.S. Department of Education has the authority to grant student loan forgiveness under Income-Based Repayment or similar plans, on the grounds that such forgiveness provisions may exceed what is permitted by the Higher Education Act of 1993.
Government Takes Action
In light of the ruling, the Department of Education put everything related to forgiveness on ice. This includes the processing of existing forgiveness applications, recertifications as well as online enrollments in income-driven repayment plans, including Income-Based Repayment, Pay As You Earn, Save, and Income Contingent Repayment.
Borrowers Have No Accrual of Forgiveness Credit
Borrowers can still remain in these plans and continue making monthly payments; however, any progress toward loan forgiveness is currently in limbo. This means there is no accrual of forgiveness credit during the pause.
No Timeline Bond Yet
The Department has issued communications indicating they are working through their systems and policy to comply with the court order, but they have not indicated any timeline for resuming forgiveness benefits to borrowers. Borrowers now await further clarity.
How Will This Affect Students and Their Loan Borrowers?
The pause in Federal Student Loan forgiveness tends to cause anxiety and uncertainty for the many borrowers across the U.S. Here is what that may look like for borrowers:
Forgiveness is Frozen
Borrowers who are on an income-driven plan will effectively not be earning credit towards forgiveness during this paused period. This may stall the timeline of the borrower in getting to their 20 or 25-year forgiveness timeline.
Adjacent Monthly Payments May Go Up
Because some repayment options are unavailable or are currently blocked (at least online), borrowers may be pushed into higher-cost repayment plans, or ultimately will have to rely on the paper application with the borrower's details from long ago. Borrowers may be forced into higher monthly payments, particularly to the detriment of low-income borrowers.
Difficult to Plan
The lack of an abbreviated timeline for when the forgiveness will be may leave borrowers in limbo. This can make planning, especially long-term planning, difficult for borrowers while relying upon debt relief in the near term.
Greater Opportunities for Default
The ambiguity around the application freeze, miscommunication, no instruction, and incompleteness on the part of multiple borrowers to fall behind on payments increases the risk of delinquency or default.
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