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The program that’s now on pause is the income-based repayment plan and there’s no indication when it might go back into effect.
The income-based repayment plan, or IBR, is one of four federal forgiveness programs that ties monthly payments to income and family size.
“The truth is, there is no such thing as loan forgiveness. It is just shifting debts from one party to another. The Trump administration will not allow the American taxpayer to take on debts that are not their own. The department stands ready to help you identify a new and legal repayment plan,” said Education Secretary Linda McMahon.
Three of those four programs were already paused under a federal injunction, but IBR was not.
Many were surprised this week when the administration decided to halt IBR as well.
In response, the Department of Education said, “IBR forgiveness is paused while our systems are updated to accurately count months not affected by the court’s injunction. IBR forgiveness will resume once those updates are completed.”
The department also announced that starting next week on August 1, interest will begin accruing for borrowers on federal savings plans.
Education Department officials say the new policies will save taxpayers money, by taking them off the hook to pay loans that aren’t theirs.
Democrats say the pauses will hurt millions of American borrowers.
The fact that he’s stopping these plans, the fact that they are in the awful bill, they’re literally over $100 billion of cuts to student aid. You know, some of these programs needed reform. But again, this is Trump taking a sledgehammer rather than any kind of scalpel to the student loan reform,” said Sen. Mark Warner (D-Va.).
The changes going into effect by the Department of Education were in part made possible by the passage of President Donald Trump’s one big, beautiful bill earlier this month.
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