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The U.S. Department of Education has paused enrolling and renewing participants in any income-driven repayment program for student loans while it digests a court opinion that the department overreached its authority.

Significant options for American borrowers managing repayment of federal student loans are in limbo following a court decision that led the U.S. Department of Education to pause activity on all income-driven repayment (IDR) plans.

In these plans, a borrower's monthly payment is keyed to their income, regardless of the size of their debt. The plans especially are helpful to those whose debt is disproportionate to their incomes — such is the case for many veterinarians.

A federal appeals court said in an opinion issued Feb. 18 that the Department of Education had overextended its authority with its newest IDR plan — called Saving on a Valuable Education, or SAVE — by promising to forgive borrowers any balance remaining after having paid for a certain period of time.


The Eighth Circuit U.S. Court of Appeals further questioned the authority of the Department of Education to forgive loans under other repayment plans that, like SAVE, were based on a 1993 law that did not spell out forgiveness but was interpreted by the department to allow it. The other affected plans are called Income-Contingent Repayment and Pay As You Earn.

Two additional IDR plans, both known as Income Based Repayment, provide for forgiveness that is explicitly authorized by a separate law, passed in 2007.
 The ruling did not challenge forgiveness under those plans.

However, in response to the court opinion, the Department of Education late last month suspended new enrollments and renewals in all five of the income-driven plans.

The pause also affects a debt relief program called Public Service Loan Forgiveness, under which borrowers employed by government or certain nonprofits have the balance of their debt forgiven after 10 years of payments.

While not part of the court case, that program is affected because borrowers pursuing loan forgiveness through public service typically use IDR plans.

Dr. Tony Bartels is the debt education director for the Veterinary Information Network, an online community for the profession, and its charitable counterpart, the VIN Foundation. Bartels regularly advises veterinarian borrowers to tap one of the IDR plans.

The VIN News Service talked with Bartels about how the latest developments affect the advice he provides, how borrowers can best navigate the uncertainty and what they can do to prepare for possible changes.

The conversation has been edited for length and clarity.

So much information is swirling on this topic. What is certain about the status of income-driven repayment plans today?

What is certain is that the income-driven repayment application is no longer available. So, effectively, there is no way to apply for an income-driven repayment plan, which also impacts people's ability to recertify their income.

Recertifying income — what is that?

The way the income-driven plans work is, they create a 12-month payment schedule that is calculated using income and family size to determine the monthly payment. In order to continue having that payment calculated based on your income, you must provide income updates at least once a year. Because of the government pause, people coming up on their yearly renewal are unable to comply.

What happens if you can't renew?

If you fail to provide your updated income, the Department of Education updates your plan to a payment that looks a lot like a standard 10-year plan payment. For most veterinarians, that would be a significant increase in their monthly payment.

That's what's happening now. People who have had their recertifications paused are receiving notices from their loan servicers that say, "We cannot process your annual renewal information. Here's your updated standard 10-year plan payment."

It's up to the veterinarian to reach out to say, "I can't afford this monthly payment" or "I would like to investigate something else." They can request a forbearance or deferment or potentially get their loans moved into an extended or graduated plan — time-driven plans that typically extend repayment and lower the monthly payment but increase the amount of interest paid over time. Time-driven plan payments do not count toward forgiveness.

How different is the monthly payment in a standard repayment plan?

Let's say you had $250,000 in student debt, you were using a plan like Pay As You Earn and you have $130,000 of income. Your payment might be around $800 or $900 per month. If you're all of a sudden not able to recertify your income and that payment gets bumped up to a standard 10-year plan amount, you're looking at a payment that's maybe $2,500, $2,600, $2,700 a month.

Many borrowers you hear from must be in some level of panic. How do you help them through that emotional state?

No doubt. There's not just the prospect of them paying two, three, four, five times what they were previously paying but also this uncertainty around whether or not they'll get the forgiveness they were expecting after making payments, in many cases, for years or even decades.

I can recommend steps they can take to prepare themselves for, hopefully, a time when we have more clarity.

What steps do you suggest?

Document everything that you can. Make sure you know what repayment plan you're in and what your current monthly payment is. When you were due to renew your income information, did you try to satisfy that requirement on time? Do you have the application that you submitted and the date that you submitted it? Keep notes on people you've talked to and what they've told you.

Document your forgiveness progress. To preserve a record of your forgiveness progress, you can download it using a free browser extension provided by the VIN Foundation. I have information on that and other tools in a recent blog post, All IDR applications for student loans are paused — now what?


By pausing all IDR plans, the Department of Education extended the reach of the court ruling. Will you elaborate?

A court opinion called into question the authority of the Department of Education to do what it did to create SAVE and also called into question the authority to forgive loans on repayment plans created under the ICR law back in the early 1990s. So ICR, Pay As You Earn and Revised Pay As You Earn (now called SAVE) are so-called Department of Education-created plans for which this opinion pretty much said, "Hey, maybe this [offering forgiveness] isn't how the law was meant to be interpreted."

So the Department of Education said, "OK, well, we're going to block access to all of the income-driven plans." But even the Eighth Circuit Court opinion talks about the legality of the Income-Based Repayment plans and Public Service Loan Forgiveness. So the Department of Education, by removing access to all of them, has completely overstepped what the opinion stated.

In their defense, they have said that they're reworking the applications, and maybe it'll be just a short-term blip while they come up with a separate application for people to apply directly to Income-Based Repayment and exclude the others.

But in the past, when we've had these periods where people may not have access to an income-driven plan, they've provided some kind of forbearance or extended the recertification dates. It wasn't such a shock that all of a sudden, you don't have any options but time-driven repayment plans.

Can borrowers who are in an IDR plan and don't need to renew soon continue making payments?

Yes, and they should. Whether or not they're going to get forgiveness credit, we'll see.

But if you're in one of the Income-Based Repayment plans created from the law that explicitly provides for forgiveness, you should receive it?

Correct. Whether that happens now or later when we work through all of this uncertainty remains to be seen. That's one of the things that I'm keeping an eye out for. People should not be getting kicked out of IBR.

Logistically, getting errors corrected for student loans is a monumental task. Loan servicer incompetence has plagued the system since the income-driven plans were a thing. And trying to get them to undo something that they shouldn't have done is very, very, very difficult to do. The best you can do is log everything that happens, know if you have something that needs to be corrected, and then you're going to have to fight like hell to get it corrected once we get through this extremely uncertain period.

For borrowers who are graduating soon and must start repaying their loans, what do you advise?

Students approaching graduation need to file a tax return before they graduate. Doing so will best set them up to apply for a plan like Income-Based Repayment once applications are being accepted again.

Beyond that, they've got a few months to see what happens. There's a grace period after graduation of six to 12 months, depending on the loan type.

Does the uncertainty change the calculus for aspiring veterinarians deciding whether and where to go to veterinary school?

Some of the uncertainty is around what this new Congress is going to do. They have ambitious plans to change the student loan structure. Some of the proposals have them eliminating [some types of loans] and putting caps on how much borrowers receive in federal student loans. That would impact anyone who is planning to take a more expensive route by attending a private veterinary school or a public school as an out-of-state resident. You'll quickly reach those caps, which means scrambling to find other ways to finance the remaining cost of those higher-priced seats.

I've been pushing an Apply Smarter concept put out through the VIN Foundation for years. It is about choosing the least costly school that you have access to. It helps jumpstart your career if you have a lower student debt. Now the Apply Smarter concept is more important than ever.


What else can borrowers do to protect themselves and prepare for possible changes?

This goes against what I've been saying for years, but: Be careful of the autopay feature. We've encouraged people to enroll in autopay to receive a 0.25% interest rate discount. But with all of the pauses and not knowing exactly what your monthly payment is going to be, you probably don't want your loan servicer to deduct payments automatically. Once we have a little more confidence that the payments are correct, we can turn that back on.

Also, math-check everything. If the loan servicers are going to push you into a 10-year-plan payment or maybe you're asking about a graduated or extended plan, ask them what the term duration is and how they arrived at the monthly payments, then double-check that against your own records. It gets really complicated when you switch from an income-driven plan to a time-driven plan [to know] what your remaining repayment terms should be.

There are rules, but they're not easy to apply. The rules depend on, do you have consolidated loans? Are your loans unconsolidated? How long have you been in repayment? How many deferment or forbearance periods have you had?

If the rules are hard to apply, how do you check the numbers?

At studentaid.gov, you can download a copy of your federal student aid data file. It does a pretty good job of showing all of the different repayment and forbearance periods. But it's really hard to pick through, so we'll probably work on something in the Student Debt Center to help calculate that for people.


I never in a million years thought I would have to know what the rules are for switching from an income-driven plan to a time-driven plan. It really never made sense to do so. Now a lot of people are being forced to do it.

Whew. Any last words?

This, too, shall pass. We've seen a lot of crazy swings in the student loan repayment system in the 12, 13 years that I've been doing this. It's really uncertain right now, but things will probably land somewhere, or at least we'll have a better idea of what to do. Just ask a lot of questions, pay close attention and save those records.