Goodbye to student loan forgiveness: government eliminates these key applications
Biden’s efforts to provide student loan debt relief were quashed in court leading Trump’s Department of Education to pull the plug on these repayment plans.
President Joe Biden came to office four years ago promising to help lighten the burden of student loan debt. While his administration was able to discharge nearly $190 billion for around 5.3 million borrowers, his attempts at wider debt forgiveness we harried by Republicans in the courts.
The Plan B to his broad student loan forgiveness, that was deemed illegal by the Supreme Court, the Saving on a Valuable Education (SAVE) plan was blocked by the US 8th Circuit Court of Appeals last week. Following the decision, on Friday, the Department of Education under Trump’s choice for acting education secretary, Denise Carter, closed applications for all Income-Driven Repayment (IDR) plans and loan consolidation applications, which was first reported by Forbes.
What does closure of student loan applications mean for borrowers?
With Trump retaking the White House and Republicans in control of both chambers of Congress the fate of the SAVE plan was all but sealed. Biden had touted it as being “the most affordable repayment plan in history,” which lowered monthly payments for some borrowers to zero. It also shortened the number of monthly payments required before a borrower would be eligible for the outstanding debt on their loan to be canceled to as few as ten years’ worth.
Around 8 million people signed up for the SAVE plan before an injunction was placed on the Department of Education from implementing the repayment scheme. Their loans have been in interest-free forbearance while the legal challenges played out. It will be only a matter of time before those borrowers will have to begin making payments again.
They will have to enroll in a new plan, but unfortunately all the online application tabs on the Federal Student Aid website for the other IDR plans have been grayed out, i.e. borrowers cannot sign up even if they wanted to. These options include Income-Contingent Repayment (ICR), Income-Based Repayment (IBR) and Pay As You Earn (PAYE) in addition to loan consolidation applications.
“Shutting down access to all income-based repayment plans is not what the 8th Circuit ordered—this was a choice by the Trump Administration and a cruel one that will inflict massive pain on millions of working families,” said Persis Yu, deputy executive director and managing counsel of the Student Borrower Protection Center, in a statement.
For the time being there is no word on any timeline to get the IDR and loan consolidation applications up and running again. In the meantime, Republican in Congress are mulling over ideas to streamline the number of IDR plans down to two for those who took out loans after 30 June, 2024 which they want to include in budget legislation that needs to pass by 14 March reports The Hill.
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