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By Aliss Higham
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The Department of Education has reopened online applications for income-driven repayment plans (IDRs) after temporarily closing them in February.
Why It Matters
Earlier this month, student borrowers looking to apply for IDR programs to lower their monthly repayments or seek loan forgiveness were met with a notice on the Federal Student Aid website informing them that online applications were temporarily suspended.
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The withdrawal of applications for the income-driven repayment came after a legal dispute over former President Joe Biden's Saving on a Valuable Education (SAVE) plan, which lowered monthly payments for borrowers and accelerated loan forgiveness. Last summer, a coalition of GOP-led states sued to halt the plan, resulting in 8 million enrolled borrowers being placed in interest-free forbearance while the case progressed. A federal court recently upheld the pause, returning the case to a district court for a final decision.
What To Know
The Education Department has confirmed that online applications for IDR programs are now open, as per a press release issued on March 26.
"Because the online application incorporated provisions subject to the injunction, it was necessary to revise the form, making it unavailable to borrowers in the interim," the Education Department said. "Paper loan consolidation applications were available to borrowers during that time."
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The temporary halt to new applications was met with a legal challenge from the American Federation of Teachers (AFT), which sought a court order to restore borrowers' access to IDR applications.
What People Are Saying
James Bergeron, Education Department acting under secretary, said in the March 26 press release: "A federal appeals court struck down another one of the Biden Administration's illegal efforts to transfer student loan debt to taxpayers. In response, the Trump Administration substantially revised the income-driven repayment plan application to conform with the ruling. Our team was able to relaunch this application within weeks, ensuring borrowers have access and the ability to access all legal repayment plans."
AFT President Randi Weingarten said in a press release issued on March 19: "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. The former president tried to fix the system for 45 million Americans, but the new president is breaking it again."
Which Programs Are Now Open for Applications?
The following four programs are now open for online applications:
- Income-Based Repayment (IBR)—sets monthly payments at 10 to 15 percent of a borrower's discretionary income, making it a suitable option for those with a high debt-to-income ratio. Borrowers can qualify for loan forgiveness after making 20 to 25 years of payments.
- Income-Contingent Repayment (ICR)—determines payments as either 20 percent of discretionary income or a fixed amount over 12 years, whichever is lower. Loan forgiveness is available after 25 years, and this is the only income-driven plan accessible to Parent PLUS Loan borrowers through consolidation.
- Pay As You Earn (PAYE)—caps payments at 10 percent of discretionary income and is available only to those who took out loans after October 1, 2007. Borrowers can receive loan forgiveness after 20 years of qualifying payments.
- Revised Pay As You Earn (REPAYE)—requires payments of 10 percent of discretionary income, regardless of income level. Loan forgiveness is granted after 20 years for undergraduate loans and 25 years for graduate loans.
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