Urgent Alert: IBR Student Loan Forgiveness Paused, Millions Face Financial Limbo

Borrowers who have patiently made payments for decades are now stuck in uncertainty as the Education Department halts forgiveness under the IBR plan amid legal chaos

Natalie C. Frank, Ph.D July 28, 2025

University of Chicago students worry about loan repayment; Wikipedia [CC BY-SA 4.0]

Washington, D.C. — In a sudden, largely unannounced move, the U.S. Department of Education has paused loan forgiveness under the Income‑Based Repayment (IBR) plan. This leaves about two million borrowers uncertain about their financial futures. This plan was the sole congressionally mandated income-driven plan not directly blocked by the court injunction targeting the Biden-era SAVE plan. But now IBR forgiveness is also frozen while systems are reorganized to reflect new legal restrictions.

There has been no actual judicial order halting IBR. However, the department insists the pause is needed to adjust how qualifying payment months, including paused forbearances, are counted following litigation over the SAVE plan.

What This Pause Means for Borrowers

IBR generally permits loan cancellation after 20 or 25 years of qualifying payments, depending on when borrowers enrolled.. Advocates and borrowers are now faced with a problem. Those who have met the 240 or 300 monthly payment benchmarks are still receiving bills.

“As of today, if you have been in debt for 25 years, you have a right under federal law to get your debt canceled, and the government is not honoring that law,” said Student Borrower Protection Center Executive Director Mike Pierce 

Even more alarming, key consumer rights groups, including the National Consumer Law Center, have called the situation a “mess,” warning that the delay undermines borrowers’ trust and could cost them additional money or even tax liabilities in 2026.

Administration’s Explanation—and Skepticism

The Education Department insists that the pause is a legal necessity because of ongoing court rulings related to other income-driven repayment plans. “For any borrower that makes a payment after they became eligible for forgiveness, the Department will refund overpayments when the discharges resume,” Deputy Press Secretary Ellen Keast said.

Still, borrowers and advocates aren't convinced that this will be the case. They say the agency hasn't explained how many borrowers are affected, why the pause occurred without warning, or when relief will start back up again.  

“Once again, it looks like the administration is placing its own judgment above the law passed by Congress,” said Pierce. “Borrowers have rights under federal law—and those rights must be enforced.” 

Broader Impact: SAVE Plan Fallout, Interest Resumption, and a New System

The IBR pause goes along with a wider overhaul of federal student loan policy. The SAVE, PAYE, and ICR plans were already halted due to legal challenges. Now, interest charges on SAVE accounts will resume on August  1st, making the situation all the more urgent.

In legislation signed July 4th, President Trump replaced existing income-driven plans with a new Repayment Assistance Plan (RAP) schedules to take effect July 2026. RAP mandates 30 years of payments before forgiveness. This is far longer than the IBR's 20‑ or 25‑year timelines.

During the transition, borrowers are being urged to enroll in IBR to avoid ballooning balances. However, with forgiveness suspended, that guidance may be nothing more than hollow reassurance. 

Why Borrowers Are Feeling Betrayed

Borrowers who believed they'd walk away debt-free after decades of disciplined payments have been left in limbo. They continue to receive statements demanding payment and face the threat of tax consequences on previously forgiven debt starting in 2026.

Abby Shafroth of the National Consumer Law Center warned that borrowers could end up paying far more than they owe if the department does not resolve the issue quickly

“Borrowers are going to lose trust in the system—and some may stop responding or default, whether justified or not,” she said. 

What Borrowers Should Do Now

Experts recommend borrowers continue making payments under their IBR plan. Any excess payments will be refunded once forgiveness resumes. For those already eligible, requesting forbearance is an alternative option, though it's important to understand that interest will keep accruing.

Borrowers should keep up with official updates on the Department of Education’s website and consult with loan servicers or advocacy groups to confirm their payment status and eligibility.

Interpretation and Concern

This unexpected policy shift indicates deeper institutional failures. Borrowers were promised cancellation after standard repayment, but now face uncertainty, poor communication, and the possibility of higher costs. An integrity gap continues between statutory entitlement and administrative follow-through.

The decision sends a chilling message: even legally mandated protections can be delayed under administrative discretion. This undermines faith in federal accountability and threatens the future of public programs built on trust and fairness.

Final Word

The IBR pause is not merely administrative housekeeping. Many believe it is a breach of promise for millions. Until those borrowers receive the cancellation they were promised, and until their overpayments are refunded, student advocates say this remains an unfinished mission.