5 Major IDR Updates Impact Student Loan Forgiveness and Payments for Millions

In the weeks before President Donald Trump's return to the White House, the Biden administration released a flurry of updates for income-driven repayment (IDR) programs. 

IDR plans can provide affordable monthly payments to borrowers using a formula based on their income and family size. Payments are typically recalculated every 12 months. Under current law, any remaining balance would normally be forgiven, typically after 20 or 25 years. However, recent court challenges have complicated the Education Department’s ability to enact student loan forgiveness under several plans.

The Education Department's announcements in the waning days of the Biden administration will impact millions of borrowers across all IDR plans, including the SAVE plan, ICR, IBR, and PAYE. However, their future under the Trump administration remains uncertain.

Here’s a breakdown of the latest developments. 

SAVE plan forbearance extended through most of 2025

The SAVE plan has been blocked since August due to an injunction issued by the 8th Circuit Court of Appeals in response to a legal challenge brought by a group of Republican-led states, which are arguing that the plan is illegal and should be struck down. Since this summer, borrowers who had enrolled in, or applied for, SAVE have been put into a forbearance. 

While borrowers impacted by the forbearance don’t have to make payments and won’t see their balances grow due to interest, the period isn’t counting toward student loan forgiveness for IDR plans or Public Service Loan Forgiveness (PSLF).

Earlier in January, the Education Department updated its SAVE plan guidance to indicate that the forbearance is now expected to last through most of 2025.

“You will be in this forbearance until servicers are able to accurately calculate monthly payments, which the Office of  Federal Student Aid expects servicers to be able to do no earlier than September 2025,” says the updated guidance. “This timeline will give borrowers the opportunity to make another choice for repayment, based on which of the updated options is best for them… Because this transition will take time, servicers expect first payments to be due no earlier than December 2025.”

It's unclear if the Trump administration will stick to this timeline, and officials have not commented publicly on it. The Department’s guidance does seem to suggest that changes to this timeline are possible. “Borrowers will be informed of any further change to this timeline,” reads the new guidance.

IDR processing has resumed, allowing borrowers to get back on track for student loan forgiveness

The good news for borrowers stuck in the SAVE plan forbearance is that earlier this month, the Education Department confirmed that IDR processing has resumed for borrowers applying to other IDR plans. Processing had been paused since the 8th Circuit issued its injunction in August because the department needed to update its internal systems to avoid running afoul of the court order. The department also reopened the PAYE and ICR plans, which had become unavailable for new enrollees following the original implementation of the SAVE plan.

“Servicers have resumed processing certain IDR applications that were paused following court orders affecting the terms and availability of IDR plans.”

— Education Department

“Servicers have resumed processing certain IDR applications that were paused following court orders affecting the terms and availability of IDR plans,” says the new department guidance. “Specifically, servicers have resumed processing borrower’s applications to enroll in: IBR, ICR, PAYE. Servicers are also processing recalculations and recertifications for IBR, ICR, and PAYE.” 

But applications for the SAVE plan and for borrowers who want their loan servicer to select the IDR plan with the lowest possible monthly payment will remain paused. “Processing for SAVE (formerly known as REPAYE) applications and applications where borrowers checked ‘lowest monthly payment’ will remain paused,” says the department. “Borrowers should check back for updates.”

Borrowers should expect lengthy processing delays, and they may be put into a temporary “processing” forbearance for up to 60 days while their IDR application is reviewed.

“Servicers will have applications in the queue that will take some time to work through,” explains the department. “If servicers need time to process a borrower’s IDR application, servicers will move the borrower into a processing forbearance for up to 60 days. Interest accrues during this short-term processing forbearance, and time in the processing forbearance that does provide IDR and PSLF credit. If the borrower’s application is not processed by their servicer within 60 days, the borrower will be moved into a general forbearance that does not count toward PSLF or IDR until their application is processed. Interest will not accrue in this general forbearance.”

IDR student loan forgiveness tracking is finally available

After many delays, the Education Department finally published IDR tracking information, allowing borrowers to see how far they are on the 20- or 25-year IDR loan forgiveness term and how much time they have remaining before qualifying for a discharge. The information is available on borrowers’ dashboards at StudentAid.gov.

The tracking information is the culmination of the Biden administration’s IDR Account Adjustment initiative, which sought to correct historical errors associated with IDR plans, forbearance-steering and poor recordkeeping. This is the first time in the IDR programs’ history that borrowers have access to concrete information on their student loan forgiveness progress.

Advocates are encouraging borrowers to take screenshots of their IDR tracking details in case the StudentAid.gov dashboard changes in the future. 

IDR student loan forgiveness remains blocked under several plans

But borrowers who have reached the 20- or 25-year thresholds to qualify for IDR loan forgiveness may not actually be able to receive a discharge if they are currently enrolled in one of several plans that are caught up in the SAVE plan litigation. 

“Forgiveness as a feature of any IDR plan created by the Department is currently enjoined,” explains Education Department guidance. “This includes the SAVE (formerly REPAYE), PAYE, and ICR repayment plans. Borrowers who reach their plan’s repayment milestone—that is, 25 years in repayment for borrowers on any of these plans or 20 years for borrowers in PAYE or undergraduate-only borrowers in SAVE—will be moved into an interest-free forbearance, if they are not already in a forbearance as a result of the litigation.”

Loan forgiveness under these programs remains blocked by the 8th Circuit because they were all created under the same authority provided by a provision of the Higher Education Act. And the challengers — and the court — are questioning whether that provision actually authorizes student loan forgiveness, despite legislative history and 30 years of regulations and bipartisan executive guidance and policy that indicates that it does. 

However, student loan forgiveness under the IBR plan is not blocked because Congress created it separately. Payments made under the other IDR plans can also count toward IBR loan forgiveness.

“The Department can and will still process loan forgiveness for the Income-Based Repayment (IBR) repayment plans, which were separately enacted by Congress,” says the department. “Payments on PAYE, SAVE, and ICR are counted toward IBR Plan forgiveness if the borrower enrolls in IBR.”

Republicans consider IDR repeal in reconciliation bill

Meanwhile, Congressional Republicans are considering repealing all IDR plans in an upcoming budget reconciliation bill, intended to be passed on party lines, given the GOP’s slim majorities in the House and the Senate. Current borrowers may be grandfathered into existing plans, however.

“Under this option, the Department of Education (ED) would offer borrowers two repayment plans for loans originated after June 30, 2024: the currently available 10-year repayment plan and a new income-driven repayment (IDR) plan,” says a House Budget Committee policy memo leaked to Politico last week. “This option would eliminate all other plans, including the Saving on a Valuable Education (SAVE) Plan, which is the IDR plan that was created administratively in 2023.”

The new IDR plan, as envisioned, would use a similar repayment formula as the PAYE plan, which is a fairly affordable program (although not as generous as the SAVE plan). However, this new IDR program would eliminate time-based student loan forgiveness after a fixed number of years. Instead, borrowers could only qualify for loan forgiveness once they have paid at least the total amount that they would have paid under a 10-year Standard plan. 

Borrowers who don’t pay that total amount would not receive any loan forgiveness and may be stuck with their loans for far longer than the 20- or 25-year periods envisioned under current IDR programs.