Education Department reopens IDR student loan plan applications

Dive Brief:

• The U.S. Department of Education has reopened online applications for most income-driven repayment student loan plans, the agency said Wednesday. 
• In February, the department had removed the online applications for all IDR options, which base monthly payments on borrowers’ incomes. It cited a Feb. 18 court ruling against a Biden-era student loan forgiveness plan, though the department blocked access to unrelated IDR plans as well.
• The department’s Federal Student Aid, in a March 26 post on its website, said “loan servicers are still updating their systems” in response to the February ruling and that servicers will begin processing new applications in the “near future.”

Dive Insight:

 The Education Department said it took down the IDR online portal in response to the Feb. 18 injunction blocking forgiveness elements of the Saving on a Valuable Education, or SAVE, student loan plan launched t under the Biden administration. 

The 8th U.S. Circuit Court of Appeals ruled in favor of seven Republican states that argued the Biden administration lacked the authority to create the plan. The ruling upheld a 2024 federal district court ruling. 

The agency said Wednesday that the applications had been “temporarily” unavailable because some IDR plans were subject to the injunction and that it had revised the applications. 

“Our team was able to relaunch this application within weeks, ensuring borrowers have access and the ability to access all legal repayment plans,” Acting Under Secretary James Bergeron said in a statement. 

The department faced criticism — and legal action — over blocking access to the IDR plans, which were mandated by Congress via laws passed in 1994 and 2007.

Last week, the American Federation of Teachers sued the Education Department for blocking online access to the plans, arguing in a Monday motion for a temporary restraining order or preliminary injunction. AFT alleged the department had “unlawfully shut down access to income-driven repayment plans for student loan borrowers” and requested a temporary restraining order or preliminary injunction forcing it to reopen statutorily required parts of the program. 

A day after AFT filed the motion, the Education Department signaled it would reopen the online application this week. In a news release Tuesday, AFT said it will “continue to pursue this matter in court until it is confident that ED will accept and timely process IDR applications.” 

In its original March 18 complaint, the teachers union detailed how the Education Department under Biden made IDR applications available to borrowers even when parts of his loan forgiveness program were blocked by courts. 

“Despite its obligation to ensure borrowers’ access” to IDR plans, and “despite its ability to do so notwithstanding the Eighth Circuit’s decisions, the Department has halted borrowers’ ability to enroll in these programs,” the union said.