Big Change: Education Department Removes Loan Forgiveness, Repayment Forms

It would appear that student loans are currently at the forefront of attention, following recent developments concerning the student loan reforms that were championed by former Vice President Joe Biden.

Forbes reports that the Department of Education, which is under the administration of President Trump, has removed the online application portal for income-driven repayment on student loans. Integrated debt repayment plans (IDR plans) are repayment programs that enable borrowers to make payments according to a formula that is applied to their income and family size, with the remaining balance being forgiven after 20-25 years of repayment.

Additionally, the department eliminated the online application that was used to submit an application for a federal Direct consolidation loan. When it comes to borrowers who are interested in obtaining lower payments and loan forgiveness through IDR, as well as the Public Service Loan Forgiveness (PSLF) program that is related to it, both applications are extremely important.

It would appear that the moves taken by the Department of Education are a reaction to the decision that was handed down by the 8th Circuit Court of Appeals during the previous week. This decision widened an injunction that prohibited lower payments and student debt forgiveness under some IDR plans.

Not only does the court’s decision prevent lower payments and faster loan forgiveness under the Savings on a Valuable Education (SAVE) plan, but it also restricts other aspects of the SAVE plan that were intended to benefit borrowers across all IDR programs. These aspects include loan forgiveness under income-contingent repayment (ICR) and pay as you earn (PAYE] programs.

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Although the courts did not rule against the SAVE plan or any of the other IDR options, Forbes reported that the decision indicates that it is highly unlikely that the SAVE plan will be able to survive. There is also a significant risk that loan forgiveness under ICR and PAYE will be denied.

In addition, Forbes mentioned that the income-based repayment (IBR) scheme, which was developed independently by Congress, is not impacted by the injunction.

According to The Hill, Republicans are attempting to do rid of the SAVE plan, which had cut the payments of some borrowers to zero dollars. When it comes to loans that were originated after June 30, 2024, they also seek to reduce the number of different IDR plans to only two attainable choices. On a ten-year basis, lawmakers estimate that this would result in savings of $127.3 billion.

Based on the findings of a research conducted by The Institute for College Access & Success, it was shown that the average payment for student loans might increase by about $200 if this proposal is implemented.

Department of Education removes student loan forgiveness and repayment applications.

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