Income-driven repayment applications shut down, student loan borrowers left in the dark – JS
By Eliza Haverstock, NerdWallet
The U.S. Education Department has temporarily taken down the online and paper applications for all income-driven repayment (IDR) plans following a legal ruling in a lawsuit against the new IDR plan, Saving on a Valuable Education (SAVE).
The Department is currently reviewing repayment applications to comply with the court’s ruling, which has led to the unavailability of the IDR and online loan consolidation applications. This means that borrowers are unable to apply for the SAVE plan or any of the other three IDR plans: Paye as You Earn (PAYE), Income-Contingent Repayment (ICR), or Income-Based Repayment (IBR).
This suspension of the online IDR application comes after a similar situation last year from July to September, where paper applications were available but with processing delays.
Borrowers who need to recertify their income for IDR plans are particularly affected by this suspension. Recertification is required annually for borrowers on all IDR plans, and missing this deadline can result in being kicked out of the plan and seeing interest capitalized, leading to a higher balance.
Recent graduates who want to enroll in an IDR plan are also impacted, as they are now limited to the standard 10-year plan, the graduated plan, or the extended plan, which may have higher monthly payments compared to IDR plans.
Struggling borrowers who need lower payments can currently only turn to deferments or forbearances for relief, which may result in increased interest over time.
To begin, it is advisable to request a forbearance or deferment before proceeding with any other actions related to your student loans. Borrowers who are considering consolidating their student loans should note that paper consolidation applications can still be submitted, but processing may be delayed at this time. Consolidation involves replacing multiple federal student loans with a single federal student loan, distinct from refinancing, which involves replacing one or more student loans with a private student loan. For borrowers with older federal loans like FFELP loans, consolidation is necessary to access IDR plans or Public Service Loan Forgiveness (PSLF).
It is recommended to wait for further information before consolidating, as the Education Department’s stance on counting pre-consolidation payments towards IDR forgiveness is uncertain. For those who still need to consolidate, a paper application can be filled out and mailed to the servicer, though delays in processing should be expected.
SAVE borrowers seeking PSLF credit are currently in an interest-free payment pause, which has halted progress towards forgiveness. Options include switching to the standard repayment plan or exploring the PSLF Buyback program if they have reached the 10-year PSLF finish line.
For additional assistance, borrowers can contact their servicer, consult with their college’s financial aid department, reach out to borrower assistance organizations, or contact state-based student loan ombudsmen if available. Stay informed about the latest updates and seek personalized guidance to navigate the evolving situation surrounding student loans. sentence: Please rewrite the sentence for me.
