Education Secretary Linda McMahon temporarily halted student loan forgiveness under a long-standing federal repayment plan to carry out system updates the agency says are needed to ensure it is in compliance with court injunctions against a Biden-era debt relief policy. 

A recent update from the department said that forgiveness through the Income-Based Repayment plan is paused as the agency’s systems are being updated. The department said that IBR, a federal repayment forgiveness plan, will resume once those updates are completed.

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The changes follow a February court injunction against former President Joe Biden’s Saving on a Valuable Education Plan, a debt relief program, which did not target forgiveness under IBR. While still legal, the Trump administration says IBR faces some complications due to challenges to the SAVE plan.

Biden’s program allowed borrowers who couldn’t make their payments during months of unemployment or financial hardship to still count those months toward federal debt relief programs such as IBR, which forgives federal loans after 20 or 25 years of repayment. 

When an appeals court struck down the SAVE plan earlier this year, it also invalidated the government’s counting of those paused or “forbearance” months — or periods when borrowers paused loan repayments—toward the time needed to achieve IBR forgiveness. 

The department argued it needs to hit pause on IBR in order to recalculate borrowers’ timelines without the paused months, noting that if forgiveness was scheduled, counting forbearance periods, the department would need to reassess loan timelines and reprogram its systems accordingly.

“The Department has temporarily paused discharges for IBR borrowers in order to comply with ongoing court injunctions regarding the Biden Administration’s illegal attempts at student loan forgiveness,” Education Department deputy press secretary Ellen Keast told the Washington Examiner. “The Department’s SAVE rule provided the authority to count forbearances in IBR toward loan forgiveness, but that rule has been enjoined. Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count. For any borrower that makes a payment after they became eligible for forgiveness, the Department will refund overpayments when the discharges resume.”

How did student loan forgiveness start under Biden

Biden’s ambitious efforts to tackle student debt relief began when he took office in 2021, as he embarked on an effort to forgive around $400 billion in student debt for over 40 million borrowers, which the Trump administration argued was egregious presidential overreach that put the burden of loans on taxpayers. 

Upon receiving lawsuits from several states protesting the action, the Supreme Court in June 2023 blocked Biden from implementing key tenets of the student loan forgiveness plan, ruling that the policy forgiving up to $20,000 of debt for borrowers exceeded his presidential authority.  

Biden responded to the court’s decision by rolling out phase two to relieve student debt. His SAVE plan, based on income and borrowers’ family size, sought to lower payments for more than 8 million borrowers and allowed for the debt forgiveness of those whose original balances were $12,000 or less after 10 years. The roughly $500 billion program, viewed by critics as a backdoor forgiveness scheme that should have required congressional approval, has been blocked in multiple courts, most recently by the 8th Circuit Court of Appeals in February.

How has Trump rolled back Biden’s student loan forgiveness initiative

Since President Donald Trump took office in January, the White House has sought to roll back Biden-era debt relief policies, with the Education Department announcing earlier this month it would resume interest payments in August for about 8 million borrowers on the SAVE plan, as millions of student borrowers have remained in forbearance with no interest accrual since it was struck down in courts. 

On the national scale, More than 42 million Americans collectively hold over $1.6 trillion in student loans. Student loan payments were paused at the beginning of the COVID-19 pandemic, and that pause was extended several times throughout the Trump and Biden administrations. 

The Federal Reserve Bank of New York concluded in March that roughly 9.7 million student loan borrowers fell behind on their payments after the payment pause ended. Currently, around 5 million borrowers are in default, meaning they haven’t paid their loan for over 270 days. 

In April, the Education Department announced it would end the five-year reprieve and resume collecting payments on May 5, with McMahon criticizing the Biden administration for having “misled borrowers” through debt forgiveness policies.

Despite the major blow the Supreme Court dealt to the former president’s debt forgiveness agenda, the Biden White House was still able to claw back billions of dollars of student loans under the borrower defense rule, a decades-old federal regulation that was rewritten by the administration back in 2022. 

WHAT WOULD HAPPEN TO KEY EDUCATION DEPARTMENT PROGRAMS IF TRUMP SHUTS THEM DOWN

Days before he left office in January, Biden issued a final round of debt relief, bringing the total student loan forgiveness he successfully extended to more than $183 billion for 5 million federal student loan borrowers.

McMahon said in March that student loans need significant reforms, as the “responsibility” of repaying these loans was lost during the Biden administration. She noted that there has been “no collection process” of outstanding student loans since March 2020, and she argued it was a burden that taxpayers should not have to carry.