Borrowers trying to get into a student debt repayment plan are in limbo right now after the Trump Administration and Department of Education took down the online application form for several popular student debt repayment plans, including Income-Driven Repayment (IDR) plans and Direct loan consolidation.
According to the Washington Post, a memo sent last week to the companies that handle the $1.6 trillion student loan portfolio, told them to stop accepting and processing all income-driven student debt repayment applications for three months.
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The memo was sent days after the DOE disabled the online applications at StudentAid.gov, without offering many details.
Borrowers can still submit a paper loan consolidation application.
The move was in response to a federal ruling regarding the Biden Administration’s Saving on a Valuable Education repayment plan (SAVE plan).
In July of 2024 more than a dozen states sued in federal court to stop the SAVE plan which provides a faster path to cancellation and lower monthly payments for millions of borrowers.
The 8th Circuit Court decision was upheld by a U.S. appeals court on Feb. 18, 2025. Circuit Judge L. Steven Grasz ruled in a 25-page opinion that former Education Secretary Miguel Cardona exceeded the authority given to him by Congress after “designing a plan where loans are largely forgiven rather than repaid.”
Grasz goes on to say, “Congress has spoken clearly when creating a repayment plan with loan forgiveness or otherwise authorizing it—explicitly stating the Secretary should cancel, discharge, repay, or assume the remaining unpaid balance.”
However, Grasz’s ruling does not specifically mention any injunction against IDR plans or debt consolidation loans.
The IDR plans tie monthly student loan debt payments to earnings and family size, with the promise of loan forgiveness after 20 to 25 years.
Only the most expensive plans are currently available, according to the memo to servicers.
In response to the applications being shut down, Student Borrower Protection Center (SBPC) Deputy Executive Director Persis Yu released the following statement on Monday, Feb. 24:
“Shutting down access to all income-based repayment plans is not what the 8th Circuit ordered—this was a choice by the Trump Administration and a cruel one that will inflict massive pain on millions of working families."
