Student loan forgiveness paused under a popular repayment plan. Here's what to know Here's what to know
Student loan forgiveness is on hold for borrowers enrolled in the Income-Based Repayment plan
The U.S. Department of Education has temporarily paused debt forgiveness under a popular repayment plan for student loan borrowers.
In an FAQ on Studentaid.org, the department states that loan forgiveness for borrowers enrolled in the Income-Based Repayment plan is on hold while it responds to court orders.
IBR is one of the department's income-driven repayment plans, also called IDRs.
Congress created the first IDR plans back in the 1990s to make student loan borrowers' bills more affordable. The plans cap people's monthly payments at a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years.
More from Personal Finance:
Trump's 'big beautiful bill' slashes CFPB funding
78% say Trump's tariffs will make it harder to deal with debt
Tax changes under Trump's 'big beautiful bill' — in one chart
IBR will be one of only a few repayment options left to millions of borrowers, after recent court actions and the passage by Congress of President Donald Trump's "big beautiful bill." That legislation phases out several income-driven repayment plans.
Here's what to know about the delay in debt relief for IBR borrowers.
Education Dept. says it's responding to court order
Student loan forgiveness is paused for IBR borrowers because of court actions involving the Biden-administration-era SAVE, or Saving on a Valuable Education, plan, the department said.
Former President Joe Biden touted SAVE as the most affordable income-driven repayment plan in history, but its generous terms soon became a point of controversy for Republicans.
In February, the 8th U.S. Circuit Court of Appeals sided with GOP-led states that sued to block the SAVE plan rule, which had sweeping impacts on student loan repayment. For example, under the rule, certain periods during which borrowers postponed their payments would count toward their forgiveness timeline. With SAVE blocked, borrowers no longer get credit during those forbearances.
"So the U.S. Department of Education will need to make changes to the qualifying payment counts," said higher education expert Mark Kantrowitz.
Ellen Keast, deputy press secretary at the Education Dept., said IBR discharges would resume "as soon as the Department is able to establish the correct payment count."
How to stay on track for student loan forgiveness
The hold on IBR discharges shouldn't impact student loan borrowers who are still years away from debt forgiveness, experts said. However, they may not receive credit for any periods during which their bills were paused.
If you're pursuing debt erasure under IBR, your payments made under the plan (or another income-driven repayment plan) will still be bringing you closer to debt cancellation, as long as you are enrolled in IBR when you become entitled to that relief.
If you expected your debt to be forgiven shortly, you should continue making payments, Kantrowitz said. You don't want to be flagged as late.
"Any excess payments will be refunded," Kantrowitz said.
This story originally appeared on: CNBC - Author:Annie Nova
