The U.S. Department of Education has announced major updates regarding Income-Driven Repayment (IDR) plans for student loans, after a temporary court-ordered pause earlier this year. These changes aim to fix issues in how monthly payments are calculated, especially concerning family size and spousal income.
This pause started in February 2025 due to a court case that blocked the SAVE plan, a student loan repayment program launched by the Biden administration. While SAVE remains on hold, three other repayment options—ICR, IBR, and PAYE—will resume processing applications starting May 10, 2025.
Let’s break down what this means for student loan borrowers.
What Caused the Pause in Student Loan Repayment Plans?
The full pause began when a court ruled that the Department of Education had to stop implementing the SAVE plan. While the SAVE plan remains in legal trouble, the department is now bringing back alternative IDR plans like:
- ICR (Income-Contingent Repayment)
- IBR (Income-Based Repayment)
- PAYE (Pay As You Earn)
These will begin processing again from May 10, 2025, and officials say they are updating systems to make sure everything follows court orders.
Mistake About Spousal Income Fixed
One big concern during this pause was a statement that seemed to suggest the IRS would count a spouse’s income even when the borrower filed taxes separately. This was against a rule that’s been in place since 1994.
The Department has now corrected that mistake. Only family size will be changed—not the way income is counted.
The new rule will now include the spouse in the family count even if taxes are filed separately. This could actually help reduce monthly loan payments. For instance, if a married couple with two kids was counted as a family of 3 under the old SAVE rule, it will now be counted as a family of 4. The more people in the family, the lower the income counted toward loan payments.
Legal experts say this is good news because it reduces what’s called “discretionary income,” which is used to calculate how much you need to pay every month.
What About Loan Forgiveness After 20-25 Years?
Many borrowers are worried about how this pause might affect their loan forgiveness after 20 or 25 years of payments under IDR plans.
The Department of Education has said that the months during the pause will still count toward forgiveness, as long as processing resumes soon. Still, lawyers and advocates recommend borrowers keep a record of all communication with loan servicers to avoid issues later.
AFT Lawsuit and Demand to Resume Non-SAVE Plans
The American Federation of Teachers (AFT) filed a lawsuit in March, saying the full pause violated the rights of borrowers who were not even part of the SAVE plan. This led to the Department now allowing other IDR plans (ICR, IBR, PAYE) to resume.
Though there’s no exact timeline for when the backlog of applications will be cleared, the Department promises to prioritize those renewing income certifications, which are required each year to keep monthly payments accurate.
No New News on SAVE Plan Yet
The future of the SAVE plan still depends on court decisions. Borrowers using this plan will not see changes until there’s a legal resolution. The Department says it will notify everyone automatically when updates are available.
With these new updates, the Department of Education is slowly returning to normal operations for most income-driven repayment plans—except SAVE.
While the correction on spousal income is a positive step, many borrowers are still anxious about how long the delays will last, especially those near the 20- or 25-year loan forgiveness mark.
If you’re in that situation, it’s important to stay updated, file your income certifications as soon as possible, and keep track of all your loan-related documents and communication.