What’s happening with forgiveness for student loans on income-based repayment plans?

NEW YORK AP Amid a federal overhaul of novice loan plans a great number of borrowers have been left wondering what it means for their hopes of loan forgiveness In particular those who are enrolled in a repayment plan known as income-based repayment or IBR have wondered if forgiveness will still be available to them A current update from the Learning Department commented forgiveness through the IBR plan is paused while systems are updated IBR forgiveness will resume once those updates are completed the agency revealed IBR is not affected by a federal court s injunction blocking former President Joe Biden s Saving on a Valuable Teaching or SAVE plan The IBR plan was created by Congress separately from other existing repayment plans including those known as PAYE and ICR It s also exempt from selected changes coming from President Donald Trump s tax and spending bill Here s what to know Which income-driven repayment plans are affected by the court s injunction Following a court injunction last summer loan forgiveness for the SAVE Income-Contingent Repayment or ICR and Pay As You Earn or PAYE plans is in the present paused because those plans were not created by Congress The legal action called into question whether participant loan forgiveness was authorized under the federal statute that governs those plans The IBR plan was created under a different authority IBR created by Congress reduces monthly payments for borrowers with lower incomes It also invokes a statute that authorizes candidate loan forgiveness of the balance at the end of a - or -year repayment term When will IBR forgiveness resume The Development Department hasn t given a timeline for when its system update will be complete and forgiveness will resume Should a borrower continue to make IBR payments in the interim Borrowers enrolled in IBR who have reached the threshold for forgiveness but who are not seeing their loans discharged as a impact of the pause may continue to make payments with the expectation that the Instruction Department will refund the excess payments The plan offers forgiveness after or monthly payments depending on when borrowers enrolled Borrowers can also request forbearance from their loan servicer In that occurrence interest would continue to accrue on any remaining balance What changes are coming from Trump s big beautiful bill Trump s tax and spending law will eventually phase out the ICR PAYE and SAVE plans replacing them with the Repayment Assistance Plan IBR plans will continue to exist and to provide forgiveness after or years RAP in contrast will require years of repayment before forgiveness is granted The Associated Press receives patronage from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy The independent foundation is separate from Charles Schwab and Co Inc The AP is solely responsible for its journalism Source