The U.S. Department of Education has officially paused forgiveness for borrowers enrolled in Income-Based Repayment (IBR) plans, citing a need to comply with a recent federal court injunction.
The unexpected suspension, announced in an update to the Federal Student Aid website earlier this month, has sparked anxiety among borrowers worried that relief may be slipping out of reach—especially as a tax exemption for canceled loans is set to expire at the end of the year.
“Currently, IBR forgiveness is paused while our systems are updated to accurately count months not affected by the court’s injunction,” the department stated. Officials noted that discharges will resume “once those updates are completed.”
The ruling affects regulatory changes made during the Biden administration to broaden the types of deferments and forbearances that count toward forgiveness—adjustments that have now been blocked, adding another layer of complexity to an already chaotic loan system.
Who’s Impacted?
Roughly 2 million borrowers enrolled in IBR plans are eligible for forgiveness after 20 to 25 years of qualifying monthly payments, depending on when they borrowed. However, the process of determining which payments count has long been plagued by calculation issues.
Despite the pause, the department insists that forgiveness under the IBR program—originally enacted by Congress—has not been scrapped altogether.
“Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count,” said Ellen Keast, deputy press secretary for the Department of Education.
Borrowers who make payments after meeting eligibility requirements will reportedly receive refunds for any overpayments once the system is updated.
But there’s more at stake than delayed relief. Aissa Canchola Banez, policy director at the Student Borrower Protection Center, warns that if the pause pushes discharges into 2026, borrowers could face unexpected tax bills. The Biden-era provision exempting forgiven loans from federal income taxes is set to expire January 1, and Congress has not acted to extend it.
“This delay can force folks to ultimately get to that date in which they could potentially see a tax bill,” Banez said.
Rising Concerns Over Trump-Era Policy Shifts
Complicating matters further, interest will begin accruing August 1 for borrowers enrolled in the SAVE Plan, another income-driven repayment option created under President Biden that is now in legal limbo.
Simultaneously, President Donald Trump’s proposed education overhaul, nicknamed the “big, beautiful bill,” could bring sweeping changes to repayment plans and forgiveness programs if enacted.
Mark Kantrowitz, a long-time student loan expert, said some borrowers worry that the Trump administration—historically critical of widespread loan forgiveness—could deliberately “slow walk” approvals under IBR plans.
The Department of Education is already strained, grappling with staffing cuts and a backlog of 1.5 million applications from borrowers requesting to switch repayment plans. According to Scott Buchanan, executive director of the Student Loan Servicing Alliance, the IBR pause may not last long, but no official timeline has been released.
For now, borrowers must continue to make payments until they receive formal discharge notices—something that could take months depending on how swiftly the Department can process the updates.
