Income-driven student loan repayment plans have been suspended. What to know

In President Donald Trump‘s latest push to shrink the Department of Education, the agency has suspended all four of its most affordable federal student loan repayment plans.

The move comes two weeks after a U.S. appeals court expanded an injunction to block the Biden-era income-driven loan repayment program called Saving on a Valuable Education, or SAVE, for three months, forcing borrowers enrolled to switch to another program.

The four IDR plans promised lower monthly payments and offered a faster route to loan forgiveness. Now, borrowers are left with only the more expensive repayment plans.

The agency also announced it will not accept or process applications for any of the programs during the pause.

Here’s what to know about income-driven repayment plans and their suspension:

Which student loan repayment plans have been suspended?

The Department of Education suspended all four of the income-driven student loan repayment plans: Income-Contingent Repayment, Pay as You Earn, Income-Based Repayment and Saving on a Valuable Education, or SAVE.

What is an income-driven student loan repayment plan?

Income-driven student loan plans afford borrowers with case-specific repayment plans based on their income and family size.

Previously, the DoE offered four IDR plans, each requiring borrowers to spend a different percentage of their discretionary income — or the income that remains after tax deductions and necessary purchases — on monthly student loan payments.

The plans, which were meant to ease the burden of student loans, extend the repayment period from the standard 10 years to 20 or 25 with the promise of forgiving the leftover debt at the end of that period. They also allow for adjustments based on changes in economic status.

What is the maximum income for income-driven repayment plans?

Generally, there is no maximum income which would disqualify a borrower from participating in an IDR plan.

All borrowers, regardless of income, may be eligible to participate in an IDR plan if their federal student loan debt is higher than their annual discretionary income or if it equals a “significant portion” of their annual income.

How many student loans are delinquent?

According to The Washington Post, one in five borrowers who are supposed to repaying their federal student loans are more than 90 days overdue. That amounted to 4 million borrowers in the end of February — double the number from 2019.

The federal government paused student loan payments during the Covid-19 pandemic, a pause which the Biden administration extended for over three years. President Biden then allowed borrowers to ease back into their payments, awarding a 12-month grace period in which borrowers who missed payments wouldn’t face financial consequences like impacted credit scores.

Will student loan payments resume?

As of now, the court’s injunction only lasts for three months. Beyond that, it’s unclear what will happen with the programs.

When do student loans go away?

While federal student loans don’t expire, some repayment plans promise complete forgiveness after a certain number of years.

For example, the DoE’s income-driven repayment plans offer forgiveness after 20 or 25 years, depending on the program.

What happens to student loans if the Department of Education is eliminated?

The Treasury Department could assume control over the distribution of federal Pell Grants and student loans if the Department of Education is dismantled.

Kirabo Jackson, professor of education and social policy at Northwestern University and former economic advisor to President Biden, discusses how education policy in the U.S. may shift under the new Trump administration.