The U.S. Department of Education has reopened several income-driven student loan repayment plans after a month-long freeze that left millions in limbo. (GV Wire Composite/Paul Marshall)

- The U.S. Department of Education unlocks income-driven student loan repayment plans after blanket freeze.
- The reinstated programs do not include SAVE, which was barred. The other plans have higher payments or reduced subsidies on interest rates.
- The Education Department receives backlash and lawsuit over freeze that left many in the lurch.
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The U.S. Department of Education has reopened several income-driven student loan repayment plans after a month-long freeze that left millions in limbo.
The February shutdown came after President Joe Biden’s Saving on Valuable Education program, known as SAVE, was legally challenged by a group of Republican-led states and barred by the U.S. Court of Appeals for the 8th Circuit.
The court order said the 1993 statute that underpinned SAVE and two other plans, Income-Contingent Repayment and Pay as You Earn, did not allow loan forgiveness.
The Education Department said the blanket freeze was necessary to comply with the order. However, there was no mention of prohibiting access to the two plans or income-driven repayment.
“A federal appeals court struck down another one of the Biden Administration’s illegal efforts to transfer student loan debt to taxpayers,” Acting Under Secretary James Bergeron said in a statement on Wednesday. “Our team was able to relaunch this application within weeks, ensuring borrowers have access and the ability to access all legal repayment plans.”
Related Story: Trump Asks Supreme Court to Let Him Cancel Grants to Teachers
The Reopening Doesn’t Cover SAVE
The reopening does not include SAVE, which remains the most generous program, promising reduced payments, prevention of unpaid interest accruing, and eventual forgiveness.
The department placed SAVE participants in administrative forbearance, until servicers are able to calculate payments.
The Education Department indicated it is looking into an alternative version of SAVE , but it “does not expect that work to be completed until ‘well into 2025’” according to a National Association of Student Financial Aid Administrators report.
The department has left students with older IDR plans, which have higher pay formats or reduced subsidies on interest rates.
“For some borrowers, there might be an advantage to enrolling in one of these previously sunset programs,” NASFAA said. Higher payment formulas could eliminate debt faster, but this means higher costs for those seeking the lowest payment possible.
Education Department Faces Backlash over Freeze
The decision to halt all income-driven plans, including programs that are not part of the program, elicited strong pushbacks.
The American Federation of Teachers filed a lawsuit against the department alleging that the freeze harmed union members who are participating in the Public Service Loan Forgiveness program.
Additionally, a group of 25 Senate Democrats wrote a letter to Education Secretary Linda McMahon condemning the action, as reported by ABC News.
“Borrowers have relied on many of these plans for decades and this sudden and reckless action means millions of borrowers have fewer repayment options available and are unsure of what to do,” the letter said.
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