Education Department Agrees to Reopen Income-Driven Loan Plans

The US Department of Education said it reopened the online application process for income-driven payment plans and loan consolidation shortly after the filing of a federal lawsuit.

The government filed notice of this decision Thursday with the US District Court for the District of Columbia. This decision follows a March 18 suit filed by the American Federation of Teachers, which asserted that shutting down access to the plans violated the Administrative Procedure Act.

DOE’s decision, however, will not end the suit nor the plaintiff’s bid for a temporary restraining order or a preliminary injunction, said Persis Yu, deputy executive director with Student Borrower Protection Center. SBPC represents AFT.

“While the department did turn the income driven repayment plan application back on, it also acknowledged that it is not yet processing those applications,” she said.

“Every day that these applications go unprocessed, borrowers are losing out on their rights and experiencing harm. As the borrower declarations show—some of these borrowers are near or should have already had their loans canceled. They are losing out on qualifying months that can count towards forgiveness,” she said.

AFT’s complaint said DOE should be compelled to restore the income-based repayment plan and the income-contingent repayment plan.

The complaint said Congress enacted two statutory provisions requiring income-driven repayment plans, the IBR statute and the ICR statute. Congress also requires the Secretary of Education to discharge a borrower’s student debt in certain circumstances under the Public Service Loan Forgiveness statute, the complaint said.

DOE created significant confusion for borrowers who “simply want to pay back their student loans according to the terms that Congress, and their contracts, provide,” the complaint said.

Berger Montague PC also represents AFT.

The case is Am. Fed. of Teachers v. US Dep’t of Educ., D.D.C., No. 25-cv-802, notice 3/27/25.