The Department of Education, under the Trump administration, announced a new development involving the suspension of student loan forgiveness under the Income-Based Repayment plan (IBR), which millions of borrowers rely on as an affordable option for repaying their loans.
The IBR plan helps borrowers with high debt relative to income by capping monthly payments at 10% or 15% of their discretionary income. Payments are adjusted each year based on income and family size. After 20 or 25 years of making payments, any remaining loan balance may be forgiven, depending on when the borrower received their first loan, ED Financial Services reported.
Why did the DOE suspend the IBR plan?
According to Forbes, several student loan forgiveness plans have faced court injunctions in recent years; however, the IBR plan is the only one without any legal challenges to date. The DOE recently issued an update explaining its decision to postpone forgiveness under the plan.
“Currently, IBR forgiveness is paused while our systems are updated,” the department shared in a statement regarding pending court challenges issued earlier in July, per Forbes. “IBR forgiveness will resume once those updates are completed.”
The update comes as the agency moves to overhaul student loan forgiveness policies, including removing all provisions of the Biden administration’s Saving on a Valuable Education (SAVE) plan. The program initially faced a federal court injunction in July 2024, and again by the Eighth Circuit Court of Appeals in February 2025, ultimately blocking the repayment plan in its entirety.
What borrowers should know about the income-driven repayment plans
As a result, the administration halted student loan forgiveness not only under SAVE but also for borrowers enrolled in the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans, according to the National Association of Student Financial Aid Administrators.
“Forgiveness as a feature of the SAVE, PAYE, and ICR Plans is currently paused, because those plans were not created by Congress,” the department said, per Forbes. “Generally, ED can and will still process loan forgiveness for the IBR Plan, which was separately enacted by Congress.”
While the recent court injunction blocked the SAVE, PAYE and ICR plans, it did not mention halting any forgiveness under the IBR plan. Critics argue the department is using the SAVE as a pretext to delay relief for millions of borrowers. As of now, over 1.5 million income-driven repayment applications remain backlogged, and the DOE has resumed charging interest on SAVE plan loans while advising borrowers to switch to IBR.
“The Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan — such as the Income-Based Repayment Plan,” Secretary of Education Linda McMahon said in a statement earlier in July. “Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress.”
