(NewsNation) — A federal court has blocked student repayment plans, forcing the Department of Education to close applications for income-driven repayment plans and loan consolidation applications.
An injunction was ruled by the 8th Circuit Court of Appeals, which carried forth a previous block of the Saving on A Valuable Education Plan, or SAVE Plan.
Forbes first reported the DOE had taken the applications down Friday, halting the Biden administration’s student loan forgiveness and repayment initiatives.
According to the report, the closure occurred Friday. Per Institute for College Access and Success data, more than 13 million Americans are enrolled in an IDR plan.
What are income-driven repayments?
As the name suggests, IDRs are repayments made based on someone’s income. In this case, it relates to monthly student loan payments that can also be based on family size in addition to earnings.
According to the DOE’s Federal Student Aid office, some Americans could have a $0 monthly repayment. The amount owed per month would fluctuate depending on income or family size changes.
Multiple types of repayment plans were part of the offerings, including the SAVE plan, Pay as You Earn repayment plan, income-based repayment plan and income-contingent repayment plan (ICR).
Balances existing for more than 20 to 25 years could have been forgiven under the IDR plan.
What does the closure mean?
Individuals looking to apply for IDR can no longer do so. After clicking on the landing page for IDR applications, the Federal Student Aid website says “application unavailable,” citing the federal court injunction.
“As a result, the IDR and loan consolidation applications are currently unavailable,” the site read. The call-to-action button — “log in to start” — is grayed out and unable to be clicked on.
Those looking to “manage [their] income-driven repayment plan” also cannot log in.
Each year, enrollees must have recertified their income to make the necessary repayments. According to Forbes, this is still possible through the submission of physical forms via the DOE’s library.
Per Investopedia, borrowers in the SAVE plan have been in forbearance since July, owing to two lawsuits blocking repayments temporarily.
What happens now?
The IDR plans are also a means for some to qualify for public service loan forgiveness, with the injunction now meaning delays and recertification not occurring.
Ostensibly, borrowers can still apply for IDR plans via manual form submission. According to Forbes, the DOE’s latest guidance is that ICR, SAVE and PAYE plans are temporarily blocked.
It is unknown if there will be further clarification as to what’s next from the department.