The Education Department has paused student loan forgiveness under the Income-Based Repayment (IBR) plan without a clear timeline of when it might resume.
The department argues any IBR forbearances were impacted by ongoing court action.
“The Department has temporarily paused discharges for IBR borrowers in order to comply with ongoing court injunctions regarding the Biden Administration’s illegal attempts at student loan forgiveness. The Department’s SAVE rule provided the authority to count forbearances in IBR toward loan forgiveness, but that rule has been enjoined,” said Ellen Keast, deputy press secretary for the department.
“Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count. For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume,” she added.
The Department of Education is working through a court’s injunction after the Biden administration’s Saving on Valuable Education (SAVE) plan was ruled illegal.
The agency argues that while the case did not impact forgiveness under IBR, what type of forbearances would count for loan discharges were.
IBR allows individuals to make payments based on income and family size, receiving forgiveness after 20 to 25 years of consecutive payments. The department has encouraged individuals to join this plan as it shuts down the SAVE option.
Those on SAVE will see interest accrual restart at the beginning of August and be kicked off the plan entirely in the following year.
