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By the time Shana Laurienzo finished college and graduate school, she had taken out about $100,000 in student loans. A decade later, she owes just over $160,000, even though she's been making payments for years. That's partly because the interest rate on her loans is 6.5%, and she's made most of her payments on an income-driven repayment plan.
"So a lot of the time, and in my case, it doesn't even cover the interest," said Laurienzo, who's based in Philadelphia and works in fundraising at a nonprofit. "And that's how you get that ballooning-out-of-control loan balance."
Income-driven repayment plans, or IDR, cap a borrower's monthly payments at a certain percentage of their income, usually 10 or 15%.
Jane Fox, chair of the attorneys chapter of the Legal Aid Society union UAW Local 2325, said the idea behind them was, "Let's make a program that lets people pay in a way that isn't going to wreck their finances, that isn't going to cause them to go into default."
IDR plans have been around in some form for 30 years, and they're critical for many borrowers, particularly those who might not be able to afford their student loans on a standard 10-year repayment plan.
"The cost of higher education is just astronomical," Fox said. "So most people rely on loans. And most people rely on loans understanding that, when they graduate, they will be able to make a monthly payment that is reasonable. That's the promise of income-driven repayment."
Another promise: If borrowers still have a balance after 20 or 25 years of paying, it will be forgiven.
But people who are trying to get into income-driven repayment plans right now can't. In late February, the Department of Education temporarily stopped accepting and processing applications for income-driven plans because of an ongoing court case over one particular income-driven plan the Joe Biden administration tried to implement.
Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center, said that plan, called SAVE, "was going to be the most affordable option for millions of borrowers across the country. And a number of Republican-led [state attorney general] offices sued the Biden administration and got the court to impose an injunction, meaning it would block the SAVE plan."
That was last spring. Originally, the injunction only applied to the SAVE plan, but a few weeks ago, a judge expanded it to include other income-driven plans too. Which means right now, no one can apply for income-driven repayment at all.
"It's a mess," Yu said. "And it has caused a lot of chaos for a lot of borrowers."
This is a particularly big deal for borrowers who are not already on an income-driven repayment plan but want to be. The difference between a monthly payment on a standard repayment plan versus an income-driven one might be hundreds of dollars.
"What is likely to happen is that millions of Americans will be sent bills for their student loans that they will not be able to pay," Fox said. "If you don't know what your student loan payment is going to be next month, so many economic decisions ripple out from that, right? People can't make decisions about whether they can take a different job, whether they can move. Can they pay down their credit cards?"
Borrowers have been panic-emailing Betsy Mayotte, who runs the nonprofit Institute of Student Loan Advisors. She's trying to reassure people that this is temporary, and income-driven repayment plans won't disappear permanently.
"Under federal statute," she said, "the Department of Education is required to offer at least income-based repayment and another income-driven plan to borrowers."
When people will be able to start applying for them again, though, is unclear. And this is happening at an already tumultuous time for people with student debt.
After nearly five years, "the collections machine for the federal student loan system is turning back on again," said Adam Minsky, a lawyer who works with student loan borrowers. "All the pandemic-related flexibilities and relief, all of that has ended. And so things are going to get real for people very quickly with this stuff. This is a really bad time for this type of massive [income-driven repayment plan] suspension to be happening."
It feels like a bad time for Shana Laurienzo. She has been working at a nonprofit and paying her loans for nearly 10 years, so she should be almost eligible to have her balance -- that $160,000 -- forgiven through the Public Service Loan Forgiveness program.
"Knowing that PSLF was going to be there at the end was kind of my saving grace, and kept me from having too much anxiety," she said.
But she doesn't know what's going to happen now because her loans are caught up in the ongoing court case over the SAVE plan, which means she hasn't been able to make qualifying payments for PSLF in about a year.
All of this uncertainty almost feels like a feature of the student loan system now. "Under the last administration, it felt like a moving goal post all the time," she said.
The Biden administration made a lot of changes to loan forgiveness and repayment plans, which helped a lot of borrowers, but created quite a bit of confusion too.
"The constant change is a lot to keep up with," Laurienzo said. "We just want to know where we stand."