The federal student loan system is, in a word, a mess right now. Between ongoing court challenges and the pending change in presidential administrations, several student loan forgiveness and repayment programs are blocked by courts or stuck in administrative limbo.
Borrowers can still qualify for student loan forgiveness despite the ongoing turmoil. But whether someone will receive any relief very much depends on the specific program. And untangling which programs are available, and which ones are not, is no easy task. Here’s a breakdown.
Student Loan Forgiveness Under SAVE Plan Is Blocked
The SAVE plan was the Biden administration’s signature repayment initiative intended to lower monthly payments and put millions of borrowers on a path to eventual student loan forgiveness.
But earlier this year, a group of Republican-led states filed a lawsuit to stop the program, arguing that the SAVE plan goes far beyond what Congress intended when it first passed a law allowing the Education Department to create income-driven repayment plans in 1993. In August, the 8th Circuit Court of Appeals agreed, and issued an injunction blocking the SAVE plan while the challenge continues. While the injunction is in effect, borrowers enrolled in SAVE have been put into a forbearance, and the Education Department is prohibited from approving any student loan forgiveness under the program. The SAVE plan appears likely to get struck down in the coming months.
Student Loan Forgiveness Under ICR and PAYE Plans Is Blocked
The Income-Contingent Repayment and Pay-As-You-Earn plans are not being directly challenged through the SAVE plan litigation. But ICR and PAYE were created using the same legal authority that was used to establish the SAVE plan. And the 8th Circuit is now questioning whether student loan forgiveness after 20 or 25 years is permitted under these plans.
Advocates for borrowers and Biden administration attorneys argue that the legislation history and 30 years of regulations, loan promissory note language, and bipartisan Education Department guidance all indicate that Congress intended for loans to be forgiven after no more than 25 years in repayment under these programs. But the 8th Circuit has suggested it may strike down loan forgiveness under ICR and PAYE as well as the SAVE plan, because Congress did not expressly include words like “discharge,” “cancel,” or “loan forgiveness” in the original statute.
In the meantime, the Education Department confirmed in October that the 8th Circuit’s ongoing injunction bars student loan forgiveness not only under the SAVE plan, but also under the ICR and PAYE plans, as well. The Biden administration recently announced that it will be reopening access to these plans so that borrowers have more options to pursue lower payments and loan forgiveness. But borrowers should keep an eye out for the 8th Circuit’s ruling, which could determine the ultimate fate of these programs.
Student Loan Forgiveness Under IBR Plan Is Not Blocked
Meanwhile, student loan forgiveness under the Income-Based Repayment, or IBR, plan, is not blocked. IBR was created through separate legislation passed by Congress and is not currently subject to any legal challenge. The 8th Circuit conceded that there is little debate that student loan forgiveness is allowable after 20 or 25 years under the IBR plan.
In updated guidance on the SAVE plan litigation issued in October, the Education Department confirmed that borrowers who reach the 20- or 25-year threshold for student loan forgiveness under IBR can still get a discharge. Importantly, payments made under the other IDR plans (ICR, PAYE, and SAVE) can also count toward IBR loan forgiveness.
Student Loan Forgiveness Under PSLF Is Not Blocked
Student loan forgiveness under the Public Service Loan Forgiveness is also not currently blocked. Like IBR, Congress created PSLF through distinct legislation that expressly calls for the eventual discharge of student loan debt under the program after a borrower makes 120 qualifying payments — the equivalent of 10 years — while meeting all of the PSLF program’s requirements.
PSLF is not currently subject to a major legal challenge. Some Republicans have called for changes or even a repeal of the PSLF program. But fundamentally changing or eliminating the PSLF program would likely require an act of Congress.
That said, many borrowers on track for PSLF are encountering indirect blockers to pursuing student loan forgiveness. Many of the eight million borrowers who enrolled in the SAVE plan have had their PSLF progress halted because the SAVE plan forbearance period does not count toward student loan forgiveness under IDR or PSLF. And borrowers who are looking to change or apply for an IDR plan — which is often a requirement to pursue PSLF — have been experiencing extreme processing delays.
Student Loan Forgiveness For Defrauded Borrowers Delayed Or Partially Blocked
The Biden administration has approved billions of dollars in student loan forgiveness and other relief for borrowers who were defrauded by their school or adversely impacted by their school’s closure. But thousands of borrowers who were approved for relief are still waiting, sometimes years after they received a notification that they qualify for loan forgiveness. It is unclear if these borrowers will receive their discharges before the Biden administration winds down.
In addition, the Education Department has paused the processing of many Borrower Defense to Repayment applications because of an ongoing legal challenge over new Borrower Defense regulations the Biden administration enacted last year.
“On Aug. 7, 2023, a federal court issued an injunction delaying the effective date of the latest borrower defense regulation that was published by the Department on Nov. 1, 2022,” says Education Department guidance. “On April 4, 2024, the court issued further instructions to enjoin the rule and postpone the effective date of the regulation pending final judgment in the case. The injunction is effective until there is a final judgment in the case. The Department will not adjudicate any borrower defense applications under the rule subject to the injunction unless and until the injunction is lifted.”
Student Loan Forgiveness For Borrowers With Medical Impairments Not Blocked
The Total and Permanent Disability discharge program, which can eliminate the federal student loan debt for borrowers with disabling medical conditions, is not currently blocked or subject to any legal challenges. In fact, the Education Department has approved $16.2 billion in TPD discharges for almost 572,000 borrowers, according to recent data released by the Education Department.
Mass Student Loan Forgiveness Blocked Or Not Yet Available
There are two major Biden administration initiatives to enact more widespread student loan forgiveness, but these programs are unlikely to go anywhere.
Biden’s so-called “Plan B” loan forgiveness program would provide relief to borrowers who have been in repayment for more than 20 or 25 years, owe more now than what they originally borrowed due to interest accrual, attended a so-called “low-value” institution that failed to meet federal standards, or qualifies for loan forgiveness under other programs but never applied. But “Plan B” student loan forgiveness has been blocked by a federal court following a separate legal challenge.
Meanwhile, Biden’s new hardship-based student loan forgiveness initiative is technically not blocked — it just hasn’t yet been finalized. But the Education Department is not expected to finalize and implement the program until well into 2025 — and the incoming Trump administration is likely to pull the plug on the program well before then.