The Trump administration has removed key repayment applications from the US Department of Education's website. The move created worries among the millions of student loan borrowers and left them in limbo. The applications for income-driven repayment (IDR) plans and loan consolidation, which are critical tools for many borrowers seeking lower monthly payments, are no longer accessible.
This action has sparked concerns over how long the disruption will last and what it means for borrowers who rely on these programmes to manage their student loan
The removal of these applications follows a ruling from the 8th Circuit Court of Appeals that blocked the Biden administration's new IDR plan, known as SAVE (Saving on a Valuable Education). As a result, the Education Department is now reviewing and revising the applications to comply with the court's decision, stated TOI.
While experts expect the disruption to be temporary, some question whether this situation could become a more permanent roadblock for borrowers.
Consequences
The removal of IDR and loan consolidation applications leaves borrowers with fewer options, especially those who rely on income-driven plans to make their student loan payments more affordable. More than 12 million people were enrolled in IDR plans as of September 2024, and many use these programmes to ensure that their monthly payments are capped at a percentage of their discretionary income.
These plans also offer a pathway to loan forgiveness after 20 to 25 years of qualifying payments.
As reported by CNBC, higher education expert Mark Kantrowitz explained that the disruption could last "a few months" while the Education Department works to make necessary adjustments. He further added, "Those due to recertify their IDR plans or consolidate their loans now have no immediate access to the necessary tools."
The disruption to student loan plans is causing difficulties for borrowers struggling with their loans. Some may face higher payments if they cannot update their income information. For those unable to afford loans, paper consolidation applications may be delayed, and alternative options like deferments and forbearances may become more popular.
The Public Service Loan Forgiveness (PSLF) programme, which offers loan forgiveness to qualifying public service workers, may face disruption due to the inability to access repayment applications. This could delay their progress towards loan forgiveness.
Recent graduates typically receive a six-month grace period before their first student loan bill is due, but those nearing the end face significant barriers to transitioning to IDR plans, stated TOI.
