Following a temporary court-ordered delay earlier this year, the United States Department of Education has announced important revisions to its Income-Driven Repayment (IDR) programs for student loans. These revisions aim to address difficulties with how monthly payments are computed, particularly those involving family size and spousal income.
This suspension began in February 2025 as a result of a court decision that invalidated the SAVE plan, a student loan repayment scheme introduced by the Biden administration. While SAVE is still on hold, three additional repayment options—ICR, IBR, and PAYE—will resume processing applications on May 10, 2025.
Let us explain down what this implies for student loan borrowers.
What caused the pause in student loan repayment plans?
The entire delay came when a court determined that the Department of Education could no longer implement the SAVE plan. While the SAVE plan is still in legal difficulties, the agency is now reintroducing alternate IDR options such as:
These will resume processing on May 10, 2025, and officials said they are updating systems to ensure everything respects court rules.
Mistake Regarding Spousal Income Fixed
One major issue during this hiatus was a comment that appeared to imply that the IRS would count a spouse’s income even if the borrower filed taxes separately. This went against a rule that has been in force since 1994.
The Department has now addressed the error. Only family size will change, not the way income is calculated.
The new regulation will now include the spouse in the family count even if taxes are done separately. This could actually help to lower monthly loan payments. For example, if a married couple with two children was counted as a family of three under the previous SAVE rule, they will now be considered a family of four. The more people in the family, the lower the income considered for loan installments.
Legal experts believe this is excellent news because it reduces “discretionary income,” which is used to calculate how much you must pay each month.
What About Loan Forgiveness After 20 to 25 Years?
Many borrowers are concerned about how the suspension may affect their loan forgiveness after 20 or 25 years of payments under IDR arrangements.
The Department of Education has stated that the months spent on the halt would still count towards forgiveness as long as processing resumes soon. However, lawyers and advocates advise borrowers to retain a record of every correspondence with loan servicers in order to avoid problems later.
AFT Lawsuit and Demand to Resume Non-SAVE Plans
The American Federation of Teachers (AFT) filed a lawsuit in March, alleging that the entire pause violated the rights of borrowers who were not even part of the SAVE plan. As a result, the Department has allowed other IDR programs (ICR, IBR, and PAYE) to resume.
Though there is no set deadline for clearing the backlog of applications, the Department promises to prioritise individuals renewing income certifications, which are necessary each year to keep monthly payments correct.
No new information on the SAVE plan has been released yet
The future of the SAVE initiative is still dependent on court rulings. Borrowers using this plan will not experience any changes until there is a legal settlement. According to the Department, everyone will be notified automatically as changes become available.
With these new improvements, the Department of Education is gradually restoring normal operations for most income-driven repayment plans—except SAVE.
While the correction on spousal income is a great move, many borrowers are still concerned about how long the delays will remain, particularly those nearing the 20- or 25-year loan forgiveness mark.
If you find yourself in this scenario, it is critical that you stay up to date, complete your income certifications as soon as possible, and keep track of all loan-related paperwork and communications.
