Over 300,000 student loan borrowers were denied a new repayment plan, court filing shows — here's why
Hundreds of thousands of student loan borrowers are facing higher monthly payments after the U.S. Department of Education denied their applications to enroll in income-driven repayment plans, according to a recent court filing. In August alone, the department rejected 327,955 requests to switch into IDR plans, with another 802,730 applications still pending as of late November.
These denials threaten to leave borrowers stuck in less affordable repayment plans or in interest-accruing forbearance, potentially delaying their progress toward loan forgiveness under programs like Public Service Loan Forgiveness. “This could cause further delays—losing out on qualifying months for forgiveness—and many borrowers will wind up paying a higher amount each month,” said Persis Yu of Protect Borrowers.
Why Applications Were Rejected
The Education Department cited an “unforeseen ambiguity” in cases where borrowers requested placement in the plan with “the lowest monthly payment,” but two plans resulted in an equal monthly bill. In response, the agency “opted to procedurally deny such applications.” Consumer advocates challenge this reasoning, noting that established guidelines provide a clear ranking of IDR plans for such scenarios.
“The U.S. Department of Education's justification for rejecting these borrowers is weak,” said higher education expert Mark Kantrowitz. Persis Yu added that the denial approach disregards existing protocols designed to handle exactly this situation.
A Mounting Crisis for Borrowers
The access barriers come amid a broader student debt crisis. More than 5 million borrowers are currently in default, a number the Education Department warns could soon double. Starting in early January, the department will resume wage garnishment for borrowers in default.
With the Biden-era SAVE plan now blocked and other IDR options being phased out under Trump’s “big beautiful bill,” the most viable remaining option for many is the Income-Based Repayment plan, which typically caps payments at 10% to 15% of discretionary income.
What Denied Borrowers Should Do
Experts urge rejected applicants to reapply immediately, this time selecting a specific plan rather than opting for “lowest payment.” Borrowers should use online calculators to compare plans and submit a new IDR application to avoid prolonged delays and higher costs.
As the backlog grows and forgiveness timelines slip, the denials underscore the administrative hurdles complicating the already fraught return to student loan repayment. For millions, affordable payments remain out of reach—not due to income, but because of procedural ambiguity and systemic processing failures.
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