Big changes are underway for student loan borrowers in the U.S. following a court-ordered pause to the Biden administration’s SAVE plan. The Department of Education has announced that it will resume processing three income-driven repayment (IDR) plans — ICR, IBR, and PAYE — starting May 10, 2025, while also correcting past errors in how spousal income and family size are calculated.
These moves come after legal challenges and pressure from advocacy groups demanding fair treatment for borrowers affected by the ongoing changes. Here’s a simplified breakdown of what’s changing, what’s staying, and what borrowers should do next.
What Triggered These Changes?
In February 2025, a court ruling blocked the SAVE plan — a key student loan reform launched by the Biden administration. This led to a temporary suspension of all IDR plan processing, affecting millions of borrowers.
The American Federation of Teachers (AFT) filed a lawsuit in March, arguing that stopping all IDR plans, even those not linked to SAVE, was unfair. Their efforts pushed the Department of Education to act and restart other repayment programs.
Which IDR Plans Will Resume?
Starting May 10, the following income-driven plans will begin accepting and processing applications again:
- ICR (Income-Contingent Repayment)
- IBR (Income-Based Repayment)
- PAYE (Pay As You Earn)
The SAVE plan remains paused due to court proceedings. Borrowers in SAVE must wait for further updates.
Borrowers enrolled in these plans will automatically receive notifications when their applications are reviewed. Those who were already in the process before the pause will be prioritized, especially if their income certifications were due.
Fixing the Spousal Income Calculation Error
A key part of the confusion came from a mistake in the Department’s earlier court filing. It incorrectly suggested that a spouse’s income would be considered in payment calculations — even if couples had filed taxes separately. This would have gone against rules in place since 1994.
This week, the Department corrected that error. Going forward:
- Spouses’ income will not be counted if taxes are filed separately
- However, family size definitions will be adjusted
Under the new rules, if you’re married with kids and file taxes separately, your spouse will now be included in your family size. This could lower your monthly payments. Why? Because family size affects how your discretionary income is calculated — the bigger your household, the smaller your payment.
Example:
If a borrower previously counted 3 people in the family (themselves + 2 kids), they can now include their spouse too, raising the count to 4. This change can reduce their calculated payments under IDR.
What About Loan Forgiveness After 20-25 Years?
One of the biggest worries for borrowers is whether the pause affects long-term forgiveness. Under most IDR plans, loans can be forgiven after 20 or 25 years of qualifying payments.
The Department says that any months under suspension will still count, as long as borrowers continue their progress and resume their applications once allowed. Still, legal experts suggest keeping records of all communications with loan servicers to avoid problems later.
No Timeline Yet for Clearing the Backlog
While it’s good news that some plans are resuming, many borrowers are still left waiting. There’s no confirmed timeline for clearing the backlog of applications, and advocates are calling for more transparency. People nearing forgiveness feel especially anxious, as even small delays could affect their eligibility.
The Department assures that it will prioritize cases with income certification deadlines and those closest to forgiveness milestones. But borrowers are advised to stay informed and proactive.
What Borrowers Should Do Now
If you’re affected by these changes, here’s what you should consider:
- If enrolled in ICR, IBR, or PAYE, check your email for updates after May 10
- Review your family size information and make sure it’s accurate
- Keep copies of all emails or calls with your loan servicer
- Stay informed about court decisions on the SAVE plan
- If you’re near loan forgiveness, double-check your payment count with your servicer
Student loan borrowers have had a tough few months due to legal battles and confusion over repayment plans. But with IDR plans like IBR, PAYE, and ICR resuming on May 10, 2025, there’s now a clearer path forward — at least for some. Although the SAVE plan remains on hold, corrections to family size definitions and spousal income errors will help reduce payments for many.
Still, borrowers should remain cautious. The future of student loan forgiveness remains uncertain, especially for those approaching the 20- or 25-year mark. Until clearer timelines are provided, it’s smart to document everything and stay closely connected with your loan servicer for any updates.
