On Wednesday, May 21, 2025, workers leave the Department of Education during the rain shower in Washington, DC.
Wesley Lapointe | Washington Post | Getty Images
Recent changes to the federal student loan system have led to fewer repayment options for many borrowers. However, even one of the remaining plans known as income-based repayment plans, or the IBR, has proven difficult to access.
“The application is being rejected without clear or logical explanation,” said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program. Rodriguez and her team members work with clients on student loans.
“These ongoing delays continue to erode public confidence in the student loan system and are likely to exacerbate the delinquency and default rates we are already seeing,” Rodriguez said.
The IBR will be one of the few repayment options left for many borrowers after recent court cases and the Congressional passage of President Donald Trump’s “Big Beautiful Bill.” The law has gradualized several existing student loan repayment plans.
This is what student loan borrowers need to know about IBR challenges.
IBR debt forgiveness is still frozen
Over the summer, the U.S. Department of Education announced that it would temporarily stop borrowers from being able to tolerate debts registered with the IBR. According to the terms of the plan, the IBR enters into debt elimination after 20 or 25 years of payment, depending on the borrower’s age of the loan.
The Education Bureau told CNBC in July that it suspended loan exemptions under the IBR and responded to recent court cases to save during the Biden administration or to save valuable education.
The department said the 8th Circuit Court of Appeals’ decision in February that blocked the save plan had other impacts on student loan repayments. For example, under rules that include SAVE, the specific period in which a borrower has deferred payments is counted in the forgiveness timeline. With Save now blocked, borrowers no longer get credit during these tolerances.
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“The department temporarily suspended for IBR borrowers in order to correctly count the loan exemptions under a court injunction on the Biden administration’s illegal relief repayment plan.”
“For borrowers who make payments after they are eligible for forgiveness, the department will refund the overpayment when discharge resumes,” Keyst said.
Earlier this month, the department wrote on its website that system changes could be taken until “Winter 2025.”
“It’s been enough time to fix an issue that appears to affect IBR’s forgiveness,” says Mark Kantrowitz, a senior education expert. “That suggests that hold-up is intentional.”
The suspension has led many student loan borrowers who have been repaid for decades now to be eligible for forgiveness with a particularly frustrating binding, Kantrowitz said. The IBR is the only income-driven repayment plan that will lead to the elimination of the loan, he said.
Denial of illegal IBR
When lawmakers phased out several student loan repayment plans over the summer with one big beautiful bill law, they made changes to the IBR, which aimed to expand the eligibility of people in the program. Experts say that is probably because many borrowers will need to access the plan after the other options have been removed or expired.
This change eliminates the previous requirement that borrowers demonstrate partial financial difficulties in qualifying for IBR. In the past, borrowers had to show that monthly IBR payments were less than invoices for the department’s standard plan, based on their income.
But “the borrowers are still being rejected because of their income,” said Elaine Rubin, director of corporate communications at Edvisors.
Kantrowitz said, “I have heard that some borrowers have been denied the IBR despite the changes that should be effective when enacted on July 4, 2025.”
The American Teacher Litigation Federation against the US Department of Education has similar accounts. The union, which represents around 2 million members, says the Trump administration is stripping borrowers of their rights.
One plaintiff, who owes about $252,659 in federal student loan debt, has paid for more than 25 years, according to a September court filing on AFT’s legal assignment. The woman applied for the IBR in July, but in August said, “it has not been a requirement of the IBR plan since the enactment of one big beautiful bill law, because it is “no partial financial difficulties.”
“The department therefore inappropriately denied access to payment plans where she was eligible and withheld from canceling the loan,” the union said.
