Student loan forgiveness grinds to a stop
The Education Department (ED) has prolonged its stoppage on student loan forgiveness under numerous income-driven repayment plans, which has instigated alarm among Democratic lawmakers. The department quietly updated its website earlier this year to indicate that forgiveness under the Income-Based Repayment (IBR) plan is also at a standstill.
IBR is authorized to allow borrowers to forgive federal student loans after 20 or 25 years of payments. While other plans, including SAVE, PAYE, and ICR, fall under greater legal scrutiny, IBR remains the only plan with a direct route to forgiveness. The department has always maintained that it has the legal authority to provide loan forgiveness to borrowers who meet IBR eligibility.
Department statement on pauses
According to guidelines posted online, the Department of Education had the following to say: “Forgiveness as a feature of the SAVE, PAYE, and ICR Plans is suspended, as those plans were not created by Congress. ED can and will still process loan forgiveness for the IBR Plan, which was authorized separately by Congress.”
But even IBR has been stopped since early this summer. The department explains the stop is necessary “while our systems are updated to accurately count months not affected by the court’s injunction,” referring to a recent court ruling on the SAVE plan. Legislators worry there is no foreseeable end to this pause, which leaves borrowers in limbo and vulnerable to potential tax consequences on forgiven balances starting next year.
Legal authority for IBR forgiveness
There is no dispute that student loan forgiveness under IBR is legal. Congress explicitly created IBR over 15 years ago to allow low-income borrowers to achieve forgiveness after 20 or 25 years of payments. Even courts questioning forgiveness under newer plans like SAVE, PAYE, and ICR have acknowledged that IBR remains a valid legal pathway.
Earlier this year, the Eighth Circuit Court of Appeals weighed the question of congressional authorisation of ICR, PAYE, and SAVE. In its ruling, the court maintained that Congress did authorise loan forgiveness under IBR. “After all, if Congress had granted that authority by ICR, it would have been pointless to create IBR and require low-income borrowers to pay for twenty or twenty-five years in order to obtain forgiveness,” the court wrote in February.
Lawmakers raise the alarm
Democratic legislators are saying that the continued suspension of student loan forgiveness is “alarming”. They argue that the pause puts borrowers who have utilised IBR to plan their financial futures at risk and may face unexpected tax burdens if the suspension continues.
Some have called for the Department of Education to resume processing IBR forgiveness immediately, pursuant to unequivocal statutory authority. Others are pursuing legislative fixes to insulate borrowers from administrative delay and legal ambiguity that have left forgiveness up in the air for millions.
Borrowers Left in Limbo
For borrowers of many student loans, the pause leaves them in limbo about how much longer they’ll have to pay and whether forgiveness will ever come. Though the legal authority to forgive IBR is clear, the department’s ongoing pause indicates that it remains difficult to work around court orders and get the programmes up and running.
With millions of Americans relying on income-driven plans, lawmakers warn that delays will have broad financial consequences, including long-term repayment stress and tax bills on balances that would have otherwise been forgiven.
Looking Ahead
While the legal and administrative saga unfolds, borrowers are left waiting to find out when, or if, forgiveness under IBR and other plans will resume. Lawmakers and advocates continue to pressure the Department of Education for clarity, arguing there is an urgent need to guarantee Congress’s original intent to provide debt relief to low-income borrowers is fulfilled.
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