The Dept. of Education has reinstated the online application for Income Driven Repayment plans and loan consolidation. Borrowers on the SAVE plan remain on an interest-free forbearance until further notice or unless they apply for another IDR plan. To learn more and get guidance on recertification deadlines, click here.

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EDCAP’s Student Loan News Updates & Insights: March 31, 2025

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Attend our free webinar on April 9th at 12 PM ET for the latest updates, including recent executive orders, layoffs, and a live Q&A with student loan experts! We will also discuss Income-Driven Repayment plan options, Public Service Loan Forgiveness and loan management tips. 

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Executive Order to Shut Down the Department of Education 

The President issued an Executive Order (EO) instructing the Secretary of Education, Linda McMahon, to facilitate the closure of the Department of Education. The EO also directs the withholding of federal funding for schools supporting DEI programs deemed to be in violation of anti-discrimination laws and promoting gender ideology. If implemented, this could significantly impact higher education. 

Student Loans to Move to the Small Business Administration (SBA)

The President announced that federal student loans will be managed by the SBA, but legal challenges may delay the transition. 

Key Takeaways for Borrowers: 

  • The transition will take time and may cause servicing and processing delays. 
  • Student loans are not being discharged, and collections on defaulted loans will continue. 
  • Missing payments for 90+ days will be reported to credit bureaus, impacting credit scores. 

Regularly save loan records, including details from StudentAid.gov, payment history, key notifications, and PSLF/IDR tracker screenshots. 

Public Service Loan Forgiveness (PSLF) Executive Order

A new Executive Order seeks to redefine which agencies qualify for PSLF, targeting those violating federal laws on immigration, terrorism, child abuse, discrimination, or state tort laws. PSLF rules remain unchanged for now, and most government and 501(c)(3) employees are protected unless Congress acts. The order mainly affects non-501(c)(3) nonprofit employees who qualify under regulations. 

IDR Applications Restored, Processing Still Paused

The American Federation of Teachers (AFT) sued the Department of Education over the blocking of IDR plans and PSLF access. Following a recent court hearing, ED has reinstated online IDR applications, but processing remains on hold. More updates to come. 

Guidance for IDR Borrowers

  • No Action Required – if you are not pursuing PSLF.  
  • Payments are paused, and no interest is accruing on accounts.  
  • For borrowers looking to accumulate credit for PSLF, they may consider submitting a switch plan application online or by PDF (send directly to the servicer).  
  • We recommend IBR if they are eligible, and they can afford it. This plan is not targeted by the current SAVE lawsuit and will continue to offer IDR Forgiveness. 
  • Request forbearance if you cannot afford a standard repayment plan—this may need to be renewed frequently by contacting the servicer.  
  • Stay alert! Submit an IDR plan application now or as soon as processing resumes. 
  • Double-check if recertification is in fact required!  
  • If you need to use a paper IDR form, submit using one or more of the following methods:   
  • Certified mail or fax (keep receipts!) Proof is key!  
  • Save screenshots, video recordings, or mailed receipts as proof of submission.  
  • If you are moved to a standard plan you can’t afford, call your servicer immediately to request forbearance (or deferment, if eligible). 
  • You may want to hold off for now until IDR applications are being processed.  
  • Continue making payments in the current IDR plan 

Guidance for PSLF Borrowers

  • Download PSLF records and progress from both Federal Student Aid (FSA) and loan servicer! 
  • Continue making payments to accumulate additional PSLF credit! 
  • Monitor the IDR recertification date to avoid being kicked out of the current plan (see previous recertification guidance). 
  • Submit a PSLF Buyback request if you meet the requirements. To be eligible for the buyback:  
  • You must have 120 qualifying months of employment on record. (File the PSLF Certification Forms to update employment).  
  • Check if there are forbearances pre-SAVE injunction that would get you to the 120.  
  • You must still have qualifying employment for those months.  
  • The months you are buying back must get you to 120 qualifying payments. 
  • If you are eligible and can afford the payments, you can earn credit for PSLF in the Standard 10-Year fixed repayment plan. Caution: Direct Consolidation loans are generally not eligible for this plan. Standard plans with payback periods longer than 10 years DO NOT qualify! 
  • Borrowers can continue to file the PSLF Certification Forms to update their employment. It is crucial they use the PSLF Help Tool and request an electronic signature from the employer whenever possible! 

Guidance for Those Considering Consolidation

  • Online Direct Consolidation Loan (DCL) applications are now available. Paper consolidation applications are still in the FSA Forms Library and servicers are processing them. 
    Be cautious: You may end up in repayment in a Standard plan after the consolidation that you cannot afford. Seek guidance. 
  • The Parent Plus Loophole: If you’re in the middle of this process, submit consolidation applications, as the July 1st deadline is looming. You may have to request forbearance once the consolidations are done if there are long delays in processing IDR applications. 
  • Consolidating to pay in a Standard Plan: If you intend to pay the post-consolidation loan in a Standard plan, there is no reason to wait to consolidate.  
  • Consolidating to get weighted average credit for PSLF: We recommend waiting for IDR applications to start processing before consolidating; particularly if the borrower is paying in a non-SAVE plan and earning credit towards forgiveness.  
  • Consolidating borrowers who are pursuing IDRF: You may lose retroactive credit accumulated through the IDR Account Adjustment. This should be clarified once the SAVE litigation is finalized.  
  • Avoid MOHELA: Do not choose MOHELA as the consolidation servicer unless there is a very good reason to do so. Wait time to speak with an agent at MOHELA to resolve problems is anywhere from 4-14 hours. Wait time at the other servicers is no where near as long.  
  • Paper Consolidation Information: All servicers are taking consolidation applications now, including Nelnet. All consolidations are processed by Aidvantage. For updated information on how to do a paper application, including the servicer mailing addresses, click here.  both Federal Student Aid (FSA) and loan servicer! 
  • You may also consider Loan Rehabilitation if you’re eligible. It will buy you more time because Rehabilitation typically takes 10-12 months and by then, we would hope IDR applications will be processing.  
  • Note: You can only rehabilitate a loan once! 

Updated FSA Guidance on IDR Recertification 

FSA provided updated guidance regarding IDR recertifications. Read the guidance carefully and monitor your servicer accounts.  

  • Submitted and processed before Feb. 20, 2025: No impact. 
  • Submitted by Feb. 20, 2025, but not processed: Recertification extended by one year—no action needed.  
  • Not Submitted by Feb. 20, 2025: Payment temporarily recalculated without income and family size. Submit a new IDR application to adjust your payment. 
  • Recertification is extended by one year—no action required. 
  • Some borrowers may see incorrect payment amounts; servicers are actively working on corrections. 

Next Steps for Borrowers 

If your servicer asks you to recertify, contact them for guidance. Failure to recertify typically resets payments to the standard 10-year plan rate but does not remove you from your IDR plan. 

Update on Total and Permanent Disability (TPD) Discharge Application Process

The TPD discharge application process is transitioning to ED, and FSA has updated its submission guidelines. Borrowers can now submit their applications online. For detailed instructions, visit the TPD information page. 

Once you submit your application, closely monitor your account to ensure timely processing. For additional assistance, you can contact customer support at 1-888-303-7818. 

IRS and ICE Nearing Agreement to Share Tax Data

The IRS and ICE are reportedly close to finalizing an agreement to share tax data for deportation purposes. Currently, families using Individual Taxpayer Identification Numbers (ITINs) for FAFSA purposes cannot link their accounts to the IRS, keeping the systems separate for ITIN users and those who do not file taxes. However, with this development, mixed-status families may be even more concerned about applying for FAFSA. Learn more. 

FAFSA Application Update 

As of March 17, 2025, 8 million students have submitted FAFSA forms for the 2025-2026 academic year, a 50% increase from last year. If you’re pursuing higher education in New York State, be sure to also utilize the Tuition Assistance Program.  

Filing Complaints 

Due to the recent reductions in the FSA Ombudsman team and the CFPB, the Student Borrower Protection Center has provided resources for borrowers seeking to file complaints through their elected officials. See the Congressional Casework Tool for more information. As a reminder, if you live in New York, you can also file a complaint with DFS.  

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