What's happening with forgiveness for student loans on income-based repayment plans?

Key Points

• IBR loan forgiveness is currently paused while the Education Department updates its systems, but will resume once those updates are complete.
• The IBR plan, created by Congress, is exempt from the court injunction affecting SAVE, PAYE and ICR plans and from changes in President Trump’s tax and spending law.
• Borrowers who have made the required 240 or 300 payments for IBR forgiveness should continue payments expecting a refund of excess amounts or request forbearance (with accruing interest).
• Under Trump’s new law, IBR will persist with 20- or 25-year forgiveness terms, whereas the incoming Repayment Assistance Plan mandates 30 years of payments before forgiveness.

NEW YORK (AP) — Amid a federal overhaul of student loan plans, many borrowers have been left wondering what it means for their hopes of loan forgiveness. In particular, those who are enrolled in a repayment plan known as income-based repayment, or IBR, have wondered if forgiveness will still be available to them.

A recent update from the Education Department said forgiveness through the IBR plan is paused while systems are updated. “IBR forgiveness will resume once those updates are completed,” the agency said.

IBR is not affected by a federal court's injunction blocking former President Joe Biden's Saving on a Valuable Education, or SAVE, plan. The IBR plan was created by Congress separately from other existing repayment plans, including those known as PAYE and ICR. It's also exempt from some changes coming from President Donald Trump's tax and spending bill.

Here's what to know.

Which income-driven repayment plans are affected by the court's injunction?

Following a court injunction last summer, loan forgiveness for the SAVE, Income-Contingent Repayment, or ICR, and Pay As You Earn, or PAYE, plans is currently paused because those plans were not created by Congress. The legal action called into question whether student loan forgiveness was authorized under the federal statute that governs those plans. The IBR plan was created under a different authority.

IBR, created by Congress, reduces monthly payments for borrowers with lower incomes. It also invokes a statute that authorizes student loan forgiveness of the balance at the end of a 20- or 25-year repayment term.

When will IBR forgiveness resume?

The Education Department hasn't given a timeline for when its system update will be complete and forgiveness will resume.

Should a borrower continue to make IBR payments in the interim?

Borrowers enrolled in IBR who have reached the threshold for forgiveness but who are not seeing their loans discharged as a result of the pause may continue to make payments with the expectation that the Education Department will refund the excess payments. The plan offers forgiveness after 240 or 300 monthly payments, depending on when borrowers enrolled.

Borrowers can also request forbearance from their loan servicer. In that case, interest would continue to accrue on any remaining balance.

What changes are coming from Trump's ‘big beautiful bill’?

Trump's tax and spending law will eventually phase out the ICR, PAYE and SAVE plans, replacing them with the Repayment Assistance Plan. IBR plans will continue to exist and to provide forgiveness after 20 or 25 years. RAP, in contrast, will require 30 years of repayment before forgiveness is granted.

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