KEY TAKEAWAYS
- The Department of Education closed online applications for Income-Driven Repayment (IDR) plans and loan consolidation applications after a federal court blocked student loan repayment plans.
- A decision by the 8th Circuit Court of Appeals agreed with states that argued the Secretary of Education did not have the authority to implement the Saving for a Valuable Education (SAVE).
- Borrowers enrolled in the SAVE plan have been in forbearance since July, and two older repayment plans reopened by the Department of Education have been taken down from its website.
The Department of Education closed applications for Income-Driven Repayment (IDR) plans and loan consolidation applications in response to a federal court blocking parts of student loan repayment plans.
The department took down the online applications on the Federal Student Aid website on Friday, as first reported by Forbes. The buttons to apply for loan consolidation and IDR plans like Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE) are grayed out.
“A federal court issued an injunction preventing the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) Plan and other income-driven repayment (IDR) plans. As a result, the IDR and loan consolidation applications are currently unavailable,” said an announcement on the IDR application page.
The application shutdown is likely in response to the 8th Circuit Court of Appeal’s decision to uphold a preliminary block on the SAVE plan. The judge’s decision agreed with states that argued neither the Secretary of Education nor former President Joe Biden had the authority to implement such a generous plan as SAVE.
The decision potentially called into question other IDR plans, as the ruling stated, “the Secretary [of Education] lacks the power to authorize loan forgiveness in an ICR plan.”
Advocates argued the 8th Circuit Court of Appeals’ decision did not include closing all IDR plans.
“This was a choice by the Trump Administration and a cruel one that will inflict massive pain on millions of working families,” Persis Yu, deputy executive director and managing counsel of the Student Borrower Protection Center, said in a statement.
Borrowers in the SAVE plan have been in forbearance since July, as two lawsuits temporarily blocked the repayment plan. The cases have gone back and forth in federal courts, and the Department of Education reopened older repayment plans to provide borrowers with more options.
These older repayment plans were part of the IDR applications that were taken down. The department did not immediately respond to a request for comment and has not confirmed if borrowers currently in IDR plans will be moved to a different repayment plan or if the applications will open up again later.