Move Comes as Trump and Musk Wreak Chaos on Working Families and Fire Thousands of Public Service Workers Who Now Need IDR to Avoid Default
February 24, 2025 | WASHINGTON, D.C. — Late Friday night, the Trump Administration pulled down the application for all Income-Driven Repayment (IDR) plans and Direct loan consolidation, which provide a critical lifeline for borrowers in need of a more affordable repayment option. According to the banner on studentaid.gov, the move was in response to the 8th Circuit decision on the Saving on a Valuable Education repayment plan (the SAVE plan). The order—which expanded the earlier injunction—blocks millions of student loan borrowers from accessing lower monthly payments and cancellation under the SAVE plan.
In response, SBPC Deputy Executive Director and Managing Counsel Persis Yu released the following statement:
“Shutting down access to all income-based repayment plans is not what the 8th Circuit ordered—this was a choice by the Trump Administration and a cruel one that will inflict massive pain on millions of working families.
“This action comes as borrowers find themselves under attack by partisan attorneys general, the Republican tax plan in Congress, and now the Trump Administration—all with the aim of pushing them further into debt. The Administration’s cruel choice to cut off access to affordable repayment options passed by Congress and enshrined in millions of borrowers’ loan contracts comes at the same time as they are wreaking havoc on communities and families across our nation—firing thousands of federal workers, and eliminating agencies like the Consumer Financial Protection Bureau charged with protecting the finances of everyday Americans. None of this is by accident. President Trump campaigned on lower costs, but once again has chosen a path that will ensure the greatest possible harm to the monthly budgets of everyday working families.”
Background
On March 28, 2024, a coalition of 11 states led by Kansas Attorney General Kris Kobach sued in federal court to stop the SAVE plan. On April 9, 2024, this lawsuit was filed by another coalition of seven states led by the Missouri Attorney General. These collective states represent about one quarter of the borrowers who had already enrolled in the plan—with more than 2.5 million enrolled residents—but sought to invalidate the SAVE plan for the entire country.
The U.S. Department of Education’s choice to interpret the 8th Circuit’s decision in such a maximalist way has further damaging ramifications. Beyond SAVE, borrowers are now unable to access the three other IDR plans that exist, creating more chaos and uncertainty at an already precarious time. In addition to removing the IDR options from the website, borrowers may not be able to recertify their income, which they are required to do once a year or when their income changes. IDR is also critical for public service workers seeking Public Service Loan Forgiveness.
About the SAVE plan
The SAVE plan—the latest income-driven option for repaying federal student loans—provided the most affordable repayment option before it was blocked in federal court. It set borrowers’ monthly payments based on their income, resulting in low or even $0 payments for low-income borrowers. Most borrowers’ monthly payments would have been halved under SAVE. Of the more than 8 million borrowers who had enrolled last year, 4.6 million qualify for a $0 monthly payment. Additionally, after 20 or 25 years, borrowers enrolled in SAVE could have their remaining balance cancelled. For borrowers who initially borrowed up to $12,000, their remaining balance would be cancelled after 10 years.
The Biden-Harris Administration had identified nearly half a million borrowers eligible to have their debts cancelled under SAVE, totaling nearly $5.5 billion in cancelled debt that will be put back into local economies, used to start businesses or buy homes, or just used to help hardworking families cover their basic needs.
The SAVE plan was not a novel use of executive power. Congress gave the Department of Education the authority to make Income-Driven Repayment plans in 1993 and the first income-driven plan was created in 1994. The SAVE plan is the fourth plan based on this authority in recent years.
Further Reading
SBPC blog explaining the lawsuits by 18 states to block SAVE: The Biden Administration’s Latest Effort to SAVE Borrowers and the States that are Hell-Bent to Stop It
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About Student Borrower Protection Center
Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.