The Education Department has once again paused student loan forgiveness for certain borrowers enrolled in income-driven repayment plans, according to a court filing submitted last week. The announcement, which received little fanfare, indicates that borrowers under the Income-Contingent Repayment and Pay As You Earn plans are currently unable to receive loan discharges they have otherwise qualified for under federal law.
According to the department’s filing, no loans were discharged under either the ICR or PAYE plans during November and December 2025. Additionally, student loan forgiveness remains suspended for any borrower who reached their discharge eligibility threshold during or after April 2025 across multiple income-driven repayment plans, including the Income-Based Repayment plan.
Technical Issues Delay Student Loan Forgiveness Processing
The Education Department cited technical problems as the primary reason for the suspension of discharges under ICR and PAYE plans. According to the filing, the department’s computer systems are currently programmed to check eligibility for discharges under the IBR plan only, and not for other income-driven repayment programs.
However, the department indicated it is working to resolve these programming issues. Officials stated they anticipate fixing the technical roadblocks sometime in February 2026, though no specific date was provided.
The filing explained that loan servicing companies are expected to resume mailing eligibility letters for ICR and PAYE after the department’s National Student Loan Data System is updated in February. Additionally, because eligibility letters provide borrowers with an opt-out period to decline student loan forgiveness, officials expect a delay between when letters are mailed and when actual cancellations occur.
Court Injunction Complicates Discharge Timeline
The pause on student loan forgiveness for borrowers who became eligible during or after April 2025 stems from a separate legal issue. The department blamed an outstanding court order related to ongoing litigation over the Saving on a Valuable Education plan, a Biden-era program that has faced legal challenges for nearly two years.
In the case Missouri v. Trump, the U.S. District Court for the Eastern District of Missouri issued an injunction that affects revised criteria for qualifying forbearance and deferment periods across multiple income-driven repayment plans. This injunction prevents certain deferment and forbearance periods from counting toward student loan forgiveness under all IDR plans, disrupting the department’s ability to accurately count qualifying months toward a borrower’s repayment term.
Meanwhile, the Education Department has focused its resources on processing discharges for borrowers who became eligible for loan cancellation before April 2025. Currently, the only cancellations taking place are for IBR borrowers who reached eligibility prior to that cutoff date.
Settlement Agreement Could Restore Processing
The department’s court filing suggests that a pending settlement agreement could eventually resolve the discharge freeze for post-April 2025 borrowers. The settlement, which would eliminate the SAVE plan entirely, is awaiting court approval.
According to the filing, once the settlement is approved and the April 2025 injunction is lifted, the department will be able to apply revised counting criteria to loans that would have become eligible for cancellation after April 2025. The settlement would end the SAVE plan but would allow certain deferment and forbearance periods that are currently enjoined to count toward student loan forgiveness under other plans.
The Education Department stated that it cannot apply the relevant qualifying criteria until the court dissolves the injunction as part of entering final judgment. Once that occurs, the department indicated it will be able to begin cancelling loans for all borrowers, regardless of when they became eligible for cancellation.
Background on Income-Driven Repayment Plans
Under federal law, income-driven repayment plans allow borrowers to make monthly payments based on their income rather than their loan balance. After 20 or 25 years of qualifying payments, any remaining balance is supposed to be forgiven.
Last year, the Education Department paused student loan forgiveness processing under all four current income-driven repayment plans, including IBR, ICR, PAYE, and SAVE. The department argued this was necessary to comply with court orders blocking the SAVE plan.
In contrast, the American Federation of Teachers filed suit challenging the broad pause as unlawful. After legal negotiations, the AFT and Education Department reached an agreement last October in which the department committed to resuming processing student loan forgiveness under certain plans.
Limited Options for Affected Borrowers
Borrowers who have reached the 20- or 25-year threshold to qualify for discharge but remain blocked from receiving student loan forgiveness currently have few remedies available. The Education Department has affirmed in previous court filings that any excess payments made beyond the number required to qualify for a discharge should be refunded to borrowers.
Additionally, borrowers can contact their loan servicer to request a temporary forbearance while waiting for their student loans to be forgiven. However, interest continues to accrue on the loan balance during forbearance periods, which could result in significant tax consequences when the discharge eventually processes.
The American Federation of Teachers has not yet filed a formal response to the Education Department’s latest court filing. It remains unclear whether the union agrees with the administration’s interpretation of how the SAVE plan injunction applies to student loan forgiveness under other income-driven repayment plans or whether additional legal action may be forthcoming.
