Major student loans changes could be headed your way, now that the Trump administration has announced they’ll be restarting student loan debt forgiveness for borrowers enrolled in an Income-Based Repayment (IBR) plan. This news comes after President Donald Trump and the Department of Education halted the program in July of this year—a move that confused borrowers, since it was one of the few remaining repayment plans available for Americans, following the elimination of several other student loan payment plans. Keep scrolling to discover who exactly qualifies for this relief plan and what sort of forgiveness borrowers can expect to receive in the upcoming months.
What to know about an Income-Based Repayment (IBR) plan
An IBR plan is an income-driven repayment plan made up of monthly payments—generally 15 percent of your discretionary income divided by 12 (the number of months in a year). However, for new borrowers who began the program on or after July 1, 2014, that number drops to 10 percent. Factors like family size also impact how much you pay, but that amount varies for each person.
For longtime borrowers, this repayment plan lasts for 25 years. For new borrowers, that number drops to 20 years. After that time period is up, the debt is ultimately forgiven if it is not paid off.
That all changed in July, though, when the program was paused without warning to borrowers. Instead, the pause was announced on the Student Aide website.
“Forgiveness as a feature of the SAVE [Saving on a Valuable Education], PAYE [Pay As You Earn] and ICR [Income-Contingent Repayment)] Plans is currently paused, because those plans were not created by Congress,” the Student Aide website read at the time. “Generally, ED [The Department of Education] can and will still process loan forgiveness for the IBR Plan, which was separately enacted by Congress. Currently, IBR forgiveness is paused while our systems are updated to accurately count months not affected by the court’s injunction.”
Following that, Education Secretary Linda McMahon said, “Since day one of the Trump Administration, we’ve focused on strengthening the student loan portfolio and simplifying repayment to better serve borrowers. As part of this effort, the Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan—such as the Income-Based Repayment Plan,” even though the IBR had been paused at the time of that statement.
Now though, a little over three months later, IBR has resumed and borrowers can once again have their student loans forgiven by the government after they reach 20 or 25 years of qualifying payments.
“This is really significant because for months they have not canceled any loans under any income-driven repayment plan,” Winston Berkman-Breen, legal director at the Student Borrower Protection Center said, per The New York Times.
Who will benefit from this student loan cancellation news
Those who will benefit from IBR plans resuming are people who have been enrolled in a plan for 20 or 25 years and have made the necessary payments determined at the signup period. From there, the Department of Education will send out emails beginning on October 21 to qualifying borrowers detailing what they need to do next.
On average, the cancellation will take effect two weeks after the Department of Education sends the email notice. However, it could take longer based on processing times and the number of people who qualify.
How to apply for an IBR plan
For those wanting to apply for an IBR plan in the hopes of eventually receiving the student loan forgiveness benefits, you can do so on the Student Aide website.
Also on the website, you can change or recertify your IBR plan. Reasons for changing it include a new job or a change in family size.
