The Education Department has pulled down all applications for borrowers seeking to enroll in income-driven repayment programs. Here’s what to know.
Federal student loan borrowers are temporarily unable to apply to income-driven repayment plans, a decades-old safety net that ties their monthly loan payment size to household income levels, as the U.S. Education Department reviews a recent federal court ruling.
The department closed applications to the repayment plans last week after the U.S. Court of Appeals for the Eighth Circuit upheld and expanded a temporary suspension of the Saving on a Valuable Education plan, known as SAVE.
That income-driven program, a centerpiece of the Biden administration’s policy agenda with eight million enrolled borrowers, generated lower payments than previous plans. Given its high cost, SAVE became the target of two separate legal challenges last spring by two groups of Republican-led states, which argued that the Biden administration had overstepped its authority.
The SAVE plan has been in legal limbo ever since, and participants’ payments have been on hold since last summer. But last week, applications to the three other income-driven plans were also taken down — older programs that hadn’t been subject to any litigation. That effectively shut the door to more affordable plans for borrowers in financial distress, and eliminated a crucial component needed to participate in the Public Service Loan Forgiveness program — at least temporarily.
“The department is reviewing repayment applications to conform with the Eighth Circuit’s ruling,” a spokesman for the Education Department said Thursday, adding that it updated information for borrowers on StudentAid.gov, including on a page about court actions related to SAVE.
Here’s what we know now. The situation is fluid, so we’ll update as circumstances change.
What just happened?
The U.S. Court of Appeals for the Eighth Circuit upheld a temporary ban on a portion of the SAVE plan issued by the U.S. District Court for the Eastern District of Missouri. The appeals court sent the case back to the District Court with instructions to expand the preliminary injunction to the entire SAVE rule (though other legal rulings had already temporarily suspended the program).