The headquarters of the Department of Education on March 12, 2025 in Washington, DC.
Win McNamee | Getty Images
The American Federation of Teachers is suing the U.S. Department of Education for shutting down access to affordable repayment plans for millions of student loan borrowers.
The AFT, one of the country’s biggest labor unions, filed the lawsuit in district court in Washington, D.C., on Tuesday over the Trump administration’s decision to take down the applications for income-driven repayment plans.
“By effectively freezing the nation’s student loan system, the new administration seems intent on making life harder for working people, including for millions of borrowers who have taken on student debt so they can go to college,” said AFT President Randi Weingarten in a statement.
Congress created the first income-driven repayment plans in the 1990s to make federal student loan borrowers’ bills more affordable. The plans limit people’s monthly payments to a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years.
More than 12 million people were enrolled in IDR plans as of September 2024, according to higher education expert Mark Kantrowitz.
On its website, the Education Department cites a recent court order as its reason for taking down IDR plan applications. That was a decision from an appeals court in February blocking the Biden administration’s new IDR plan, known as SAVE, or Saving on a Valuable Education.
“The Department is working to ensure these programs conform with the 8th Circuit’s ruling, and anticipates the revised form allowing borrowers to change repayment plans to be available as soon as next week,” a spokesperson for the agency told CNBC.
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However, AFT argues that the Education Department interpreted the ruling from the 8th U.S. Circuit Court of Appeals too broadly by pausing the applications for other IDR plans.
The Trump administration’s move leaves borrowers enrolled in the now-blocked SAVE program unable to move into a new IDR plan. New applicants are unable to seek lower bills under the different options as well. IDR plans are also a critical tool for borrowers pursuing loan forgiveness.
Mike Pierce, executive director of the Student Borrower Protection Center, said these consequences were hitting borrowers hard.
“Student loan borrowers are desperate for help, struggling to keep up with spiking monthly payments in a sinking economy, all while President Trump plays politics with the student loan system,” Pierce said.