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TAKEAWAYS KEY
- The Department of Education has reopened applications to Income-Driven Repayment plans (IDR), and online loan consolidating after a suit was filed.
- The lawsuit alleged that closing IDR applications prevented the borrowers from entering into a more affordable payment plan and making eligible payments towards Public Service Loan Forgiveness.
- Borrowers are now able to apply for Income Based Repayment, Pay As You Earn and Income-Contingent Repayment. However processing may take some time.
The Department of Education is reopening applications for Income-Driven Repayment plans (IDRs) and online consolidation of loans.
During a Tuesday hearing, attorneys from the Department of Justice indicated that the Education agency would reopen IDR application. The American Federation of Teachers is suing over last month’s closure of IDR applications. A decision by a judge in a separate case heard by the 8th Circuit Court of Appeals involving the Saving for a Valuable Education (SAVE) plan questioned parts of other IDR plans.
On Wednesday, the Department of Education said the forms had been revised to comply with the appeals court's order and are once again available.
In a press release, James Bergeron said that a federal appeals court had struck down yet another illegal attempt by the Biden Administration to transfer student debt to taxpayers. “In response to the ruling, the Trump Administration substantially rewrote the income-driven plan application in order to comply with it.”
The closure prevented some borrowers from entering an affordable repayment plan and others were unable recertify their IDR. The lawsuit claims that this led to higher monthly payments and some public workers were unable earn credit towards Public Service Loan Forgiveness.
Borrowers are now able to apply online for Income Based Repayment (IBR), Income-Contingent Repayment(ICR), Pay As You Earn(PAYE), and Loan Consolidation. The Revised PAYE (REPAYE), Saving for a Valuable Education, (SAVE), and the Income-Contingent Repayment (ICR) are still not available.
The Student Borrower Protection Center, one of the organizations that represents the AFT in this lawsuit, stated that although applications will be opened, the Department of Education is unlikely to begin processing applications immediately.
