Key Points
- Income-Driven Repayment (IDR) and student loan consolidation applications are unavailable on StudentAid.gov due to a court injunction.
- The injunction, which affects the broader regulations tied to the SAVE plan, could delay pending applications and impact processing for at least 45 days.
- Borrowers looking to enroll in IDR or consolidate loans can submit paper applications through their loan servicer.
Borrowers looking to apply for an Income-Driven Repayment (IDR) plan or consolidate their federal student loans are facing an unexpected roadblock. Following a court injunction tied to the broader regulations governing the SAVE plan, applications for IDR and loan consolidation have been temporarily halted on StudentAid.gov.
Borrowers this week received the following message posted on StudentAid.gov when attempting to change repayment plans or process a loan consolidation application:
This pause, which could last at least 45 days (per the language written in the injunction), leaves borrowers uncertain about how their repayment plans will be processed. While paper applications remain an option, the delay could complicate planning for those trying to secure lower monthly payments or prepare for loan forgiveness.
Why Are Applications Unavailable?
The issue stems from an ongoing legal battle over the Biden administration’s changes to student loan repayment regulations that created the SAVE plan. The court ruling blocked the SAVE plan’s implementation, but the recent injunction was expanded to cover the entire set of regulations, affecting IDR applications and loan consolidation.
This paused happened previously when the court first blocked the SAVE plan, but the Department of Education was able to process non-impacted repayment plans after a short delay. However, now that more repayment plans are impacted, the Department of Education has once again paused processing.
It's notable that the Department of Education has not put out any statements regarding the pause yet.
For borrowers, this means:
- Online applications for IDR plans are temporarily unavailable.
- Online student loan consolidation applications are also suspended.
- Pending applications may not be processed until the injunction is lifted.
While legal challenges have primarily focused on the SAVE plan, this broader injunction affects multiple aspects of loan repayment.
What Borrowers Can Do Now
Despite the online application freeze, borrowers still have options:
1. Submit a Paper Application
Federal loan servicers are still accepting paper applications for IDR plans and loan consolidation. Borrowers can download forms from the Federal Student Aid website and submit them through their servicer’s document portal.
2. Monitor Pending Applications
If you submitted an IDR or consolidation application before the ruling, it’s likely paused unless it was processed by Thursday, February 20, 2024. Borrowers in this situation should stay in contact with their loan servicer to check on processing status.
3. Temporary Forbearance
Borrowers facing financial hardship while waiting for their IDR application to be processed should be eligible for an administrative forbearance. This would temporarily pause payments without impacting credit scores while your application is in process or limbo.
4. Watch for Updates on Loan Repayment Rules
Borrowers need to continue to watch for updates on repayment plan rules. They should also make sure their contact information is updated so they don't miss any repayment restarts or recertification deadlines. This recently happened to thousands of student loan borrowers, seriously impacting their credit.
At some point in the future, these applications will reopen online, but until then, borrowers simply need to plan and prepare.
Don't Miss These Other Stories:
Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.