What to know about forgiveness pause in IBR student loan repayment plans
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The Department of Education has temporarily suspended loan forgiveness under its popular Income-Based Repayment plan (IBR).
Why it matters: IBR is the only current income-driven student loan forgiveness plan not subject to a legal challenge or court injunction, and Trump's signature "big, beautiful bill" significantly cut back on repayment options for borrowers.
How it works: Income-Based Repayment is one of four federal plans that establish monthly payments based on earnings and family size over a 20 or 25 year period.
- Monthly payments are generally equal to 15% of a person's discretionary income (10% if you are a new borrower on or after July 1, 2014), divided by 12, per the DOE.
- After the 20 or 25 years, remaining loan balances are eligible for forgiveness.
What's happening: The DOE said it was pausing forgiveness under the plan in an FAQ earlier this month.
- The reason for the pause, it says, has to do with required changes to forgiveness calculations caused by court actions impacting the related SAVE Plan.
- "Currently, IBR forgiveness is paused while our systems are updated," the department said. "IBR forgiveness will resume once those updates are completed."
What they're saying: In a statement to Axios, Ellen Keast, Deputy Press Secretary repeated that the IBR pause was to "comply with ongoing court injunctions regarding the Biden Administration's illegal attempts at student loan forgiveness."
- "For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume."
Here's what to know:
How many people will be impacted by the IBR suspension?
- About 2 million borrowers are enrolled in the plan.
What other repayment plans are suspended?
After much court back-and-forth, the SAVE, ICR, and PAYE plans are all in legal limbo.
- IBR was created separately by Congress, which is why it was exempt from the freeze.
What does the One Big Beautiful Bill Act change?
The bill cuts the number of repayment plan choices that federal student loan borrowers have down to two.
- One is a standard repayment plan, which gives borrowers a fixed monthly payment to repay their loans in 10–25 years. The current standard plan has a loan period of 10 years, regardless of loan size.
- The other is the Repayment Assistance Plan, which will involve monthly payments between 1% and 10% of a borrower's discretionary income (current offerings set payments at 10%, 15% or 20% of income).
- Borrowers on any current repayment plan other than the Saving on a Valuable Education (SAVE) plan will be able to keep their current payment structure, however.
What happened to the SAVE plan?
- The BBB changes will affect those who take on loans from July 1, 2026, onward and current SAVE plan borrowers, as an appeals court blocked the Biden administration plan in February.
- Under the Republicans' plan, SAVE borrowers will have between July 2026 and July 2028 to choose a new plan. After July 1, 2028, those borrowers, if they haven't chosen one, will automatically be enrolled in the income-based repayment plan.
- There are about 8 million federal loan holders enrolled in SAVE plans, making it the most popular income-driven repayment plan.
