Student loan forgiveness still unavailable on IBR plan

The Trump administration paused student loan forgiveness on a popular plan earlier this summer. It has not yet resumed the debt cancellation, and this week, lawmakers urged it to do so.

The U.S. Department of Education said earlier this summer that it was pausing the loan discharge component on the Income Based Repayment, or IBR, plan. That freeze remains in place.

It’s a setback to families who have been expecting — and are legally entitled to — the aid, lawmakers, including Sen. Bernie Sanders, I-Vt., wrote to Education Secretary Linda McMahon on Monday.

“At a time when Americans across the country are struggling to meet the costs of health care, food, housing, child care and other basic needs, it is unacceptable for the Trump administration to take any action that delays or denies legally mandated debt relief,” the lawmakers wrote.

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There are currently 1.97 million federal student loan borrowers enrolled in IBR, according to higher education expert Mark Kantrowitz.

Here’s what borrowers should know about the plan’s paused loan cancellation.

IBR is one of the Education Department’s income-driven repayment plans, also called IDRs.

Congress created the first IDR plans in the 1990s with the goal of making student loan borrowers’ bills more affordable. Historically, the plans cap people’s monthly payments at a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years.

IBR will be one of only a few manageable repayment options left to millions of borrowers, after recent court actions and the passage by Congress of President Donald Trump’s “big beautiful bill.” That legislation phases out several income-driven repayment plans.

Under the terms of IBR, borrowers pay 10% of their discretionary income each month — and that share rises to 15% for certain borrowers with older loans.

Debt forgiveness is supposed to come after 20 years or 25 years, depending on when you took out your loans. (Older loans are subject to the longer timeline.)

The U.S. Department of Education told CNBC it paused loan forgiveness under IBR while it responds to recent court actions involving the Biden administration-era SAVE, or Saving on a Valuable Education, plan.

The department said that the 8th U.S. Circuit Court of Appeals decision in February, which blocked the SAVE plan, had other impacts on student loan repayment. For example, under the rule involving SAVE, certain periods during which borrowers postponed their payments would count toward their forgiveness timeline. With SAVE blocked, borrowers no longer get credit during those forbearances.

Ellen Keast, deputy press secretary at the Education Department, said in a late July statement that IBR discharges would resume “as soon as the Department is able to establish the correct payment count.”

The department did not immediately respond to questions about why the pause continues.

“The federal government does not move very quickly, but I would have expected some progress by now,” said Kantrowitz.

The hold on IBR discharges shouldn’t impact student loan borrowers who are still years away from debt forgiveness, experts said. 

In fact, since IBR became available only in 2009, the soonest many borrowers could qualify for forgiveness would be 2034, Kantrowitz said. The current delay in debt erasure would most likely impact borrowers who’d previously been enrolled in another IDR plan — Income-Contingent Repayment, or ICR — and later switched to IBR.

If you’re pursuing debt forgiveness under IBR, your payments made under the plan (or another income-driven repayment plan) will still be bringing you closer to debt cancellation, as long as you are enrolled in IBR when you become entitled to that relief.

If you expected your debt to be forgiven shortly, you should continue making payments, Kantrowitz said. You don’t want to be flagged as late, and any overpayments should be refunded to you, he added.