Education Department removes student loan forgiveness and repayment applications

The Department of Education has abruptly removed online applications for income-driven repayment plans and Direct loan consolidation, according to Forbes, throwing the federal student loan system into greater turmoil since these applications are essential for millions of borrowers seeking affordable payments. This sudden action on Friday left the application buttons grayed out on the department's websites, with only a brief message explaining the removal.

The decision appears to be in response to last week's ruling from the 8th  U.S. Circuit Court of Appeals, which extended and expanded a block on lower payments and student loan forgiveness under several IDR plans. Forbes reports that the online IDR application is critical for recent graduates looking to enroll, current borrowers who need to recertify their income annually, and those wanting to change their repayment plan, while the Direct consolidation application is important for borrowers pursuing Public Service Loan Forgiveness or trying to get out of default.

Student loan borrowers who expected smaller monthly payments under the Saving on a Valuable Education (SAVE) plan now face significant challenges following the U.S. appeals court decision blocking the program on Feb. 18, as CNBC reports.

The adjustment is likely to be difficult, with higher education expert Mark Kantrowitz telling CNBC that borrowers who were in SAVE will have to pay more on their federal student loans, in some cases double or even triple their monthly payments. The Biden administration had introduced SAVE in summer 2023, but Republican-backed states quickly filed lawsuits against the program, arguing that former President Biden was attempting to find a roundabout way to forgive student debt after the Supreme Court blocked his attempt at sweeping debt cancellation. CNBC notes that SAVE offered lower monthly payments than any other income-driven repayment plan and quicker debt erasure for those with small balances.

According to the updates of The Department of Education, decision to close applications came after the 8th Circuit Court of Appeals upheld a preliminary block on the SAVE plan, according to Investopedia, with the court agreeing with states that argued neither the secretary of education nor former President Biden had the authority to implement such a generous plan.

The information on the Federal Student Aid website now shows buttons for loan consolidation and IDR plans like Income-Contingent Repayment, Income-Based Repayment, Pay As You Earn, and SAVE all grayed out, as Investopedia reports The IDR and loan consolidation applications are currently unavailable. The department has not immediately responded to requests for comment about whether borrowers currently in IDR plans will be moved to different repayment options or if applications will reopen later.