Looming deadlines, higher payments
The court’s ruling specifically blocked the SAVE plan, one of four IDR plans designed to help borrowers manage their monthly payments based on income. This decision halted access to the program.
Borrowers enrolled in SAVE are now stuck in forbearance, which pauses payments and sets interest rates to zero. However, time stuck in forbearance does not count toward loan forgiveness, including Public Service Loan Forgiveness (PSLF), which many borrowers in nonprofit or government jobs rely on.
The ruling also casts doubt on the legality of student loan forgiveness after 20 or 25 years for borrowers enrolled in Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans. However, these two older plans remain accessible. The ruling did not block the Income-Based Repayment (IBR) plan, another IDR option created in 2007, or PSLF, which remains available for some borrowers.
Despite this, the Department of Education has stopped all IDR applications, including for the unaffected plans. As a result, borrowers cannot update their income or switch to alternative repayment plans, leading to delays and payment spikes. The inability to recertify income has become a major issue for those enrolled in ICR, IBR, and PAYE.
Each year, borrowers must update their income with their loan service providers, which recalculates monthly payments. But since the Department of Education halted the application process, recertification is impossible. This has resulted in higher payments and, in some cases, triggered interest capitalization — meaning borrowers could owe even more in the long term.
Some borrowers have been shocked by the increases in their monthly payments. According to Forbes, one PAYE borrower whose income recertification was delayed saw her payments jump from $600 per month to $3,400 under a Standard Repayment Plan. Others are being pushed into Graduated or Extended repayment plans, which are often unaffordable and usually don’t count toward forgiveness.
“I’m supposed to recertify by the 10th, and my payments are going up by $1,000 in May,” one borrower shared on Reddit. “I wasn’t asked to recertify, and now my account shows I owe $2,411.11, due today.”
Meanwhile, the Department of Education’s recent layoffs have left its borrower services division stretched thin, making it difficult to dispute issues or receive guidance on their repayment options. The Department of Education has also failed to update its guidance to reflect recent changes, forcing borrowers to navigate an increasingly complex and inaccessible system.
As the Department of Education struggles to get its systems back on track, borrowers are left grappling with an uncertain future, rising payments and delays in forgiveness programs.
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Learn moreHow to tackle rising student loan payments
With the student loan landscape in flux, managing repayments can feel like navigating a maze. However, there are steps borrowers can take to stay on track and protect their finances during these uncertain times.
If you’ve been relying on an IDR plan like the Biden-era SAVE plan, you may have already noticed disruptions.
First, if your loan repayment schedule changes, contact your loan servicer immediately to understand your options.
While the future of these plans is in limbo, it's important to explore alternative repayment options. Standard, Graduated and Extended repayment plans may offer some relief if your income-driven plan is no longer available. Stay informed by regularly checking official Department of Education updates and trusted financial news sources.
Prepare for potential increases by adjusting your budget. With a larger portion of your income going toward loan payments, you may need to cut back on discretionary spending to prioritize essentials like housing, utilities and transportation.
Although financial experts typically recommend setting aside at least 15% of your annual income for retirement, higher student loan payments may make that seem out of reach. If saving for retirement or an emergency fund feels out of reach, consider starting with small contributions to maintain financial stability.
Some borrowers may consider loan consolidation or refinancing or private student loans to secure a lower interest rate or more manageable payments. However, refinancing federal loans may result in the loss of key benefits, such as IDR options or student loan forgiveness, which could prove costly down the line.
If you’re struggling to make payments, explore available loan forgiveness programs, but be sure to review their strict eligibility requirements. Meanwhile, a group of Democratic attorneys general has filed a lawsuit against the Trump administration, arguing the sudden firing of half the Department of Education’s workforce is unlawful.
As legal battles and administrative uncertainty continue, millions of borrowers remain in limbo.
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