Federal legislative efforts towards Student Loan Forgiveness under the Income-Based Repayment (IBR) plan have hit a roadblock, despite concerns raised by lawmakers warning of its potential benefits for millions of borrowers.

Federal legislative efforts towards Student Loan Forgiveness under the Income-Based Repayment (IBR) plan have hit a roadblock, despite concerns raised by lawmakers warning of its potential benefits for millions of borrowers.

The US Department of Education has suspended student loan forgiveness under the Income-Based Repayment (IBR) plan, a move that has been met with concern from Democratic lawmakers.

The decision, made in collaboration with the Office of Management and Budget, was announced in mid-2023. The suspension has been ongoing since at least earlier this summer, and the department has provided no timeline for when it will resume forgiveness under IBR.

A group of Democratic senators, including Bernie Sanders (D-VT) and Elizabeth Warren (D-Mass), wrote to Secretary of Education Linda McMahon last week, expressing their concerns about the ongoing block on IBR student loan forgiveness. They noted that the apparent suspension came without any notice to Congress.

IBR is currently the only repayment plan offering borrowers a path to 20- or 25-year loan forgiveness. The suspension has been questioned by mounting legal challenges and the senators, who raised alarms over the potential financial implications for borrowers.

The department has suggested that borrowers can continue to make payments on their student loans, even if they have reached the threshold for student loan forgiveness, and should get refunded for any excess payments made. However, the senators were critical of this advice, saying that borrowers who have been repaying for decades should not be expected to continue paying beyond the 25-year timeframe required in law. They also expressed concerns about the department's assurance that refund payments will be made quickly or in a timely manner.

The department claims the suspension is necessary for updating their systems to accurately count months not affected by a court's injunction. The court's injunction referenced is related to a ruling involving the SAVE plan, which was created through a separate legal authority.

The Eight Circuit Court of Appeals has acknowledged that Congress permitted loans to be discharged under IBR when it created the program more than 15 years ago. Borrowers are currently allowed to exempt any forgiven student loan amounts from their federal taxes, but this tax exemption expires at the end of this calendar year.

Starting in 2026, student loan forgiveness under IBR will revert to being taxable again, which could have profound financial implications for borrowers whose debt relief is pushed into next year as a result of the department's actions.

The senators' letter states that the department has provided no timeline for when it will resume forgiveness under IBR, which is alarming considering many borrowers have already been waiting months for relief. They urged the department to act swiftly to resolve the issue and resume student loan forgiveness under the IBR plan.

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