Trump officials reject over 300,000 student loan borrower IDR applications

Many student loan borrowers hit repayment hurdles: The U.S. Department of Education rejected their applications to switch to a new payment plan.

The department denied requests from 327,955 borrowers to enroll in an income-driven repayment plan in August alone. Application to the court on December 15.

The denials mean many of these borrowers may be stuck with previous repayment plans with a higher monthly payment or forbearance accruing interest. As of the end of November, another 802,730 IDR plan applications were pending at the Ministry of Education.

Millions of student loan holders rely on IDR plans to meet their payments and eventually get out of debt. The plans cap borrowers’ monthly bills at a portion of their discretionary income and lead to debt cancellation after a specified period of time, usually 20 years or 25 years. Those taking the popular Public Service Loan Forgiveness program, which allows public officials to have their debts erased after a decade, are also typically required to enroll in an IDR plan.

Consumer advocates said they were concerned about the number of rejections.

“This could result in further delays – losing months that qualify for Public Service Loan Forgiveness and IDR cancellation – and many of these borrowers will have to pay a higher amount each month,” said Persis Yu, executive director and executive counsel of Protection Borrowers.

More than 42 million Americans have student loans and outstanding debt $1.6 trillion.

The Ministry of Education did not respond to a request for comment.

As part of the agreement between the American Federation of Teachers and the Trump administration, the Education Department was required to submit status reports on its progress on a backlog of hundreds of thousands of IDR plan applications from student loan borrowers.

The teachers union, which represents nearly 2 million members, filed a lawsuit against the administration in March, accusing it of depriving student loan borrowers of their rights. Protect Debtors served as legal counsel to AFT.

Here’s what you need to know about recent IDR plan application rejections and what to do if this happens to you.

Ministry of Education filed hundreds of thousands of IDR applicationsunpredictable uncertainty“About which repayment plan borrowers should be enrolled in.

These federal student loan holders had requested to be included in the “lowest monthly payment” plan, according to the application. But Trump officials said the two plans resulted in equal monthly bills.

“In response, ED has chosen to procedurally reject such applications,” the agency said in the court document.

Yu said the Trump administration’s logic does not follow established guidelines.

“The IDR application envisioned two possible repayment plans with equal payment amounts and provided a plan for such a situation,” Yu said. he said. He added that in these cases, there is a sequence of IDR plans that the Ministry of Education must follow.

Higher education expert Mark Kantrowitz also said he questioned Trump officials’ statement.

“The U.S. Department of Education’s justification for rejecting these borrowers is weak,” Kantrowitz said.

The difficulty of accessing an affordable student loan repayment plan comes at an already challenging time for borrowers. The Department of Education says more than 5 million student loan holders are currently in default, and that total could soon rise to nearly 10 million borrowers in question earlier this year.

The Department of Education confirmed to CNBC on Tuesday that it will begin garnishing the wages of borrowers who have defaulted on their student loans in early January.

If your IDR plan application is denied, you should file a new request as soon as possible, Kantrowitz said.

Kantrowitz said borrowers should choose a specific plan in their application “partly because the borrower must make an informed decision,” but also because of recent denials about uncertainty about which plan has the lowest monthly payment.

The Biden administration’s Savings on Valuable Education (SAVINGS) plan is now obsolete after the program was blocked by a court. And President Donald Trump’s “big beautiful bill” phases out some other IDR plans.

As a result, the best option available for many borrowers is Income Based Reimbursement Kantrowitz said the plan or IBR. Under IBR terms, borrowers pay 10% of their discretionary income each month; but that rate rises to 15% for some borrowers with older loans.

Yes several vehicles available online to help you determine How much your monthly bill will be under different plans.

You can submit a request for an IDR plan at: StudentAid.gov.