PART 2: The Current Impact on Borrowers of Lawsuits Challenging the SAVE Plan and the Removal of IDR Applications

For more information on the February court order issued in a lawsuit challenging the SAVE plan, see Part 1 here. 

Lawsuits brought by several states challenging the SAVE Plan have led to a series of court orders—and big changes by the Department of Education—that have created chaos for borrowers. In response to new court decision in February 2025, the Department has temporarily suspended the application process for all income-driven repayment (IDR) plans, including the Income-Based Repayment (IBR) plan, Pay As You Earn (PAYE) plan, Income-Contingent Repayment (ICR) plan, and the SAVE plan. In addition, the Department has suspended the online consolidation application, but it is still accepting consolidation applications that are submitted by paper or PDF. 

This blog walks through how different groups of borrowers are impacted by this pause and explains their options, as of March 20, 2025:

1. Where Do Things Stand For Borrowers Enrolled in the SAVE Plan
2. Where Do Things Stand for Borrowers Enrolled in IBR, PAYE, or ICR?
3. Where Do Things Stand for Borrowers In Standard Plans Who Want to Enroll in IBR, PAYE, ICR, or SAVE?
4. Where do things stand for borrowers that want to consolidate their loans?

Where Do Things Stand For Borrowers Enrolled in the SAVE Plan 

1. The SAVE Forbearance

Last summer, in response to a court order that temporarily blocked aspects of the SAVE plan, the Department of Education placed all roughly 8 million borrowers who had already enrolled in SAVE in the “SAVE forbearance.” The SAVE forbearance temporarily pauses billing and payments for borrowers enrolled in SAVE. 

Here is key information about the SAVE forbearance:

• All borrowers who were enrolled in SAVE should have been placed automatically in the SAVE forbearance. Borrowers cannot opt out of the forbearance.
• Borrowers in the SAVE forbearance are not required to make payments 
• Borrowers in the SAVE forbearance are not being charged interest. 
• Borrowers in the SAVE plan are not required to recertify their income while the SAVE forbearance is in effect. 
• Time spent in the SAVE forbearance does not count as qualifying time towards having loans eventually canceled through IDR or Public Service Loan Forgiveness (PSLF). This means borrowers in the SAVE forbearance are currently missing out on making progress toward becoming debt-free in those programs. 

We do not know how long the SAVE forbearance will last. The February court order should not change or end the SAVE forbearance. 

2. How Can Borrowers in the SAVE Forbearance Make Progress Toward Public Service Loan Forgiveness (PSLF) or IDR Cancellation Now?

Many borrowers in the SAVE forbearance are concerned about missing out on making progress toward having their loans canceled through PSLF (which offers cancellation after 10 years of qualifying payments while working in public service) or IDR (which offers cancellation after 10-25 years of qualifying payments in IDR plans). 

The Department has said that borrowers in the SAVE forbearance cannot earn credit toward PSLF or IDR cancellation by opting out of the forbearance. In addition borrowers cannot earn credit by continuing to make payments while in the SAVE forbearance. The Department says that any payments borrowers in the SAVE forbearance make during the forbearance will simply be applied to the borrower’s future bills.

Instead, the Department has said there are currently only two ways borrowers currently in the SAVE forbearance can earn credit toward PSLF or IDR cancellation, but both have serious problems:

A. Switch to a different repayment plan?

Borrowers in the SAVE forbearance can apply to switch to a different repayment plan that will allow them to continue making payments and earning credit toward loan cancellation in PSLF or IDR. Payments in any income-driven repayment plan (including IBR, PAYE, and ICR) or a 10-year standard plan are considered qualifying payments toward PSLF or IDR cancellation.

Currently, there are two problems with this:

• Borrowers cannot switch to a different IDR plan right now because the application is closed and the Department of Education has paused application processing.
  • However, borrowers who want to switch IDR plans might consider submitting a paper/PDF IDR application requesting to switch and calling their servicer to request a processing forbearance while they wait for their application to be processed. The processing forbearance pauses their obligation to make payments and counts, for up to 60 days, toward PSLF.  Borrowers should keep records that they submitted an application to switch plans (for example, by mailing it to their servicer via certified mail with return receipt).
• Some borrowers in SAVE may not be eligible to switch to a qualifying 10-year standard plan because they have already spent more than 10 years in repayment or because they consolidated their loans and are subject to a different repayment term.  

Additionally, all of these plans typically have higher monthly payments than SAVE and may not be affordable.

B. Request to Buy Back Credit in PSLF or IDR?

Another option that the Department says borrowers in the SAVE forbearance can use is to  request to “buy back” credit toward PSLF for time in the forbearance. New rules allow borrowers to “buy back” certain months that did not count towards PSLF or IDR cancellation by arranging to pay the amounts that the borrower would have needed to pay during those months under an eligible plan. However, these buy back options do not appear to be functional right now and might not be something borrowers can rely on.

The PSLF buy back process is new and does not appear to currently be operating. Additionally, it is not clear how the Department will calculate how much borrowers will owe under the buy back process for months the borrower was in the SAVE forbearance. For more information about how to “buy back” credit toward PSLF, click here.

The IDR buy back is new and has not been set up. Additionally, it is part of the same rules that are being challenged in the SAVE litigation and may be impacted or blocked via the litigation. Borrowers cannot currently use or count on the IDR buy back process to get credit toward IDR cancellation.

Where Do Things Currently Stand for Borrowers Enrolled in IBR, PAYE, or ICR?

1. Payments Continue for Borrowers Enrolled In IBR, PAYE, and ICR

Borrowers in ICR, IBR, and PAYE are NOT part of the SAVE forbearance and should plan to continue making their regular payments. If a borrower can no longer afford their regular payments, they can call their servicer to request that they be put in a forbearance or a deferment to temporarily pause payments. However, be careful: many types of forbearances and deferments do not count towards PSLF or IDR forgiveness, and interest may continue to be charged. 

2. Borrowers in IBR, PAYE, and ICR with recertification deadlines now face an impossible situation

All borrowers in IDR plans are generally required to update their income and family size information every year so their payments can be adjusted to reflect their current circumstances. This process is called “recertification.” 

While recertification was paused during the COVID-19 payment pause, recertification deadlines resumed on February 1, 2025. While some servicers have begun telling borrowers that their recertification deadlines will be pushed back to no sooner than February 2026, that has not happened across the board. Many borrowers have been told that their deadline is not being pushed back. Every borrower has an individualized recertification deadline; borrowers can check their student loan account or contact their loan servicer to find out what their recertification deadline is. 

Borrowers who have upcoming recertification deadlines are facing an impossible situation: many servicers are telling them they must recertify, but to recertify, borrowers must submit and their servicer must process an IDR application. Because those applications are down right now and servicers aren’t processing the applications, borrowers cannot recertify and will miss their deadline through no fault of their own.

If borrowers miss their deadline to recertify in IBR, PAYE, or ICR, their payments will be recalculated based on a fixed payment plan that doesn’t account for their income or what they can afford. As a result, borrowers will see much larger bills. Additionally, borrowers in IBR will have any accrued interest on their account capitalized, which means they’ll have to pay more over time. 

The Department of Education could protect against those unfair harms to borrowers by extending recertification deadlines, just as it already has for borrowers in SAVE, but as of March 20, many borrowers are still reporting that they’re being required to recertify now. 

What can borrowers do if they face a recertification deadline while the IDR application is unavailable? There aren’t any good or certain options for borrowers put in this situation, but borrowers should first confirm what their recertification deadline is with their servicer. If their recertification deadline is coming up soon, borrowers might consider submitting a paper/PDF application and keeping records that they submitted it on time. For example, a borrower can mail a copy to their servicer via certified mail with return receipt. Borrowers can then call their servicer to request a processing forbearance while they wait for their recertification application to be processed. The processing forbearance pauses their obligation to make payments and counts, for up to 60 days, toward PSLF. 

Where Do Things Stand for Borrowers In Standard Plans Who Want to Enroll in IBR, PAYE, ICR, or SAVE?

Borrowers cannot currently enroll in any of the income-driven repayment plans—IBR, PAYE, ICR, or SAVE. That is because the Department of Education has taken the online application down and suspended processing of applications.

We do not know how long this IDR application suspension will last, as the Department of Education has not responded to questions or provided guidance. Additionally, after the suspension ends, there may be significant delays in processing applications due to backlogs of applications. 

Borrowers who want to enroll in IBR, PAYE, ICR or SAVE because they cannot afford their current payment plan do have some options to avoid delinquency and default:

1. Apply for a deferment that pauses payments, some interest, and may qualify toward PSLF or IDR – examples include an economic hardship deferment, cancer deferment, or National Guard Duty deferment. More information about these deferments and how to apply is available here.
2. Submit a paper/PDF application for IDR and contact your servicer to request a processing forbearance. The Department states that servicers should first place borrowers who apply for SAVE or other IDR plans in a “processing forbearance” of up to 60 days while the servicer processes the application. During the processing forbearance, borrowers will not have to make payments and will earn qualifying payment credit toward IDR or PSLF cancellation, but will be charged interest. After 60 days is up, if your application still has not been processed and you cannot afford to make payments, you may request a general forbearance (which will not earn credit toward IDR or PSLF). 
3. Contact your servicer and request a forbearance because you cannot afford your payments right now. This will pause your payments but you will not earn time toward IDR or PSLF and you may be charged interest. 

Where do things stand for borrowers that want to consolidate their loans? 

Consolidating federal student loans is a way of combining them by taking out a new Direct Consolidation loan to pay off your other federal student loans, and is sometimes used by borrowers to gain access to a more affordable IDR plan, to become eligible for PSLF, or to get out of default. See here for more information on consolidation.

Along with removing the IDR application, the Department of Education has temporarily removed the online application to consolidate loans, which for many borrowers was the easiest and fastest way to consolidate their loans.

Borrowers can still apply to consolidate their loans now using a paper/PDF consolidation application, available here. 

But there are risks to attempting to consolidate right now:

• First, there is a risk that consolidating loans will result in losing all of the credit the borrower previously earned toward reaching IDR cancellation at the end of their 10 to 25 year IDR repayment term, and will have to start over at 0. This is because the student loan rules that protect borrowers from losing IDR credit for time they’ve already spent in repayment when they consolidate are part of the same set of rules being challenged in the SAVE lawsuits. We do not yet know whether the Department of Education considers this part of the rules to be blocked, and the court order is unclear. We need to await clarity from the Department of Education.  
• Second, because IDR applications are not currently being processed, borrowers may find that they cannot consolidate and repay their new consolidation loan in IDR. Even if a borrower is currently in an IDR plan, when they consolidate, they’ll be removed from that plan and will need to reapply – which they currently cannot do.
  • This is particularly a problem for borrowers with loans in default. Traditionally, consolidation has been a critical pathway out of default. But borrowers can only consolidate out of default if they either (a) simultaneously apply for IDR or (b) agree to make three months of payments at an “affordable” level worked out with their default servicer before consolidating. Because borrowers can’t apply for IDR right now, the simpler path (a) may not be available. Additionally, if borrowers cannot enroll in IDR after getting out of default, they may not be able to afford their payments and may default again.