IDR Repayment Applications Return But Processing Frozen

After nearly a month of blocked access, the U.S. Department of Education says it will reopen applications for income-driven repayment (IDR) plans beginning March 26. This move follows legal pressure from the American Federation of Teachers and the Student Borrower Protection Center, who filed a lawsuit and emergency motion seeking to restore access to federally mandated repayment and forgiveness programs.

While borrowers will now be able to submit new applications, the department has confirmed that it will not begin processing them. That means millions of borrowers hoping to reduce their monthly payments or make progress toward Public Service Loan Forgiveness (PSLF) will remain stuck in place for now, unable to move forward or get credit for time served.

Legal Pressure Forces Partial Reversal

The Department’s decision to reinstate the application process is a direct response to mounting legal challenges.

In a hearing this week, Department of Justice lawyers representing the Education Department told a federal court that IDR application forms would be restored. This came after AFT filed for a temporary restraining order, arguing that the government had unlawfully shut down access to repayment plans that Congress requires to be available.

While the move is seen as progress, advocates were quick to point out that applications still won’t be reviewed or processed anytime soon.

What's Stopping Application Processing?

The Department of Education removed the IDR Application due to an injunction from the 8th Circuit Court related to the ongoing SAVE Lawsuit. The concern specifically relates to Question 2 on the IDR Application: Choose a plan and then continue to Item 3: (Recommended) I want the income-driven repayment plan with the lowest monthly payment, SAVE (formerly known as REPAYE), IBR, PAYE, and ICR.

At issue is borrowers who fill out the application can select a repayment plan that's barred by the injunction: either choosing "Recommended" or "SAVE". These options cannot be processed, and given the workload of loan servicers, it's rumored that the Department of Education simply blocked the plan application in order to split the application apart - eventually creating an individual form for each repayment plan.

That would allow the valid plans to be processed without causing undue workload.

Now that applications will be restarted, it's likely to create a large processing queue since loan servicers will be required to look at each application and reject ineligible ones, while processing ones that are eligible (once processing even resumes).  

Borrowers Trapped In Limbo

For borrowers already enrolled in IDR plans or trying to switch into them, the delay has real consequences.

Some are reporting massive increases in monthly bills, jumping from a few hundred dollars to nearly $1,000, because they cannot recertify their income. Others are frozen in administrative forbearance under the SAVE plan, unable to switch into an alternative IDR plan or continue earning progress toward PSLF.

What To Expect

While the reappearance of IDR application forms is a first step, the broader problems remain unresolved. More than one million borrowers are currently in limbo, either waiting for applications to be processed or unable to access student loan forgiveness programs at all.

The next court hearing is scheduled for April 17, and the Department has not committed to a timeline for restarting application reviews or correcting borrower accounts. MOHELA posted a message that FSA has directed those currently enrolled in IDR plans to have their recertification dates postponed, but other servicers have been lacking in that communication.

For now, the message to borrowers is clear: You can apply but don’t expect relief just yet.

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