The Department of Education is suspending student loan forgiveness under the Income-Based Repayment plan (IBR), which offers an affordable option for borrowers to repay their loans.
Why is loan forgiveness under IBR being suspended?
Why you should care:
Forbes reported that the Department of Education offered a cryptic explanation for the postponement of student loan forgiveness under the Income-Based Repayment (IBR), implying that the program is paused while the agency’s systems are updated to count months that aren’t impacted by a court injunction aimed at the SAVE plan.
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In early 2025, a federal appeals court ruling expanded a court injunction to include a full rule that controls the SAVE plan. Forbes noted that some portions of the SAVE regulations affect other income-driven repayment plans, like IBR. The limits allowed specific deferment and forbearance periods to count toward student loan forgiveness under multiple income-driven repayment plans.
According to FOX Business, the SAVE plan (Saving on a Valuable Education) was introduced by former President Biden in 2023 and restricted student loan payments at 5% of discretionary income for undergraduates and 10% for graduate loans. In 2024, some Republican-led states filed a lawsuit to halt the SAVE plan, but a federal appeals court issued an injunction blocking SAVE.
What can student loan borrowers under an IBR plan do?
Big picture view:
Student loan borrowers on an Income-Based Repayment plan (IBR) who have reached the limit for student loan forgiveness have limited repayment options.
Borrowers can continue making payments under the IBR hoping they can get a refund for their extra payments once their student loans are dismissed. Forbes reported that payments made over the 240 or 300 monthly payments required for IBR loan forgiveness should be eligible for a refund.
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Borrowers can also contact the student loan service company to ask for a forbearance to suspend their payments while they wait for a dismissal. However, interest would accumulate on their loan balance during the forbearance, and it’s unknown how long the IBR student loan forgiveness suspension by the Education Department will last.
What is the Income-Based Repayment plan?
Dig deeper:
Income-Based Repayment plans use a system tied to a student loan borrower’s income and family size to determine a borrower’s monthly payment requirement. Payments are then recalculated every 12 months.
According to Forbes, student loan borrowers who haven’t paid off their student loans by the end of their repayment term, which is either 20 or 25 years depending on when they took out their loans, would be eligible for student loan forgiveness.
The Source: Information for this story was provided by Forbes and previous FOX Business reporting. This story was reported from Washington, D.C.
