In early 2025, the American Federation of Teachers (AFT) launched a significant lawsuit against the U.S. Department of Education (ED), challenging an abrupt halt to the nation’s Income-Driven Repayment (IDR) plans for federal student loans. This case captured headline attention as it thrust millions of borrowers—and the future of Public Service Loan Forgiveness (PSLF)—into uncertainty. Here’s a full overview of how the lawsuit started, the main legal issues, recent developments, and possible future implications.
AFT v. Ed IDR Lawsuit: Background and Major Issues
What Prompted the Lawsuit?
On March 18, 2025, AFT filed a lawsuit in federal court after the Department of Education quietly removed access to all IDR applications from its website and ordered loan servicers to halt processing. This action followed a February appeals court injunction that blocked implementation of the “Saving on a Valuable Education” (SAVE) repayment plan, but the Department’s move went much further, shuttering access to all IDR plans—leaving millions unable to apply for affordable payments tied to income or recertify existing plans.
Why Are IDR Plans So Critical?
IDR options, first authorized by Congress in the 1990s, cap federal student loan payments as a proportion of a borrower’s income and family size, providing long-term relief and helping prevent defaults. Participation in these plans is also the only way for public servants—including teachers, nurses, and first responders—to earn credit toward PSLF, which forgives student debt after 120 qualifying payments.
Legal Arguments in the AFT v. ED Case
AFT’s Main Claims
- ED’s shutdown of IDR applications and processing violates federal law (the Higher Education Act), borrowers’ contractual rights, and the Administrative Procedure Act.
- The Department’s actions were arbitrary, left millions without affordable repayment options, caused financial hardship, and jeopardized essential PSLF progress for public service workers.
- AFT sought an emergency court order to compel ED to reinstate IDR access and resume processing, ensuring borrowers are not unfairly penalized or excluded from PSLF benefits they are entitled to.
Department of Education’s Response
- ED argued that the halt was a temporary compliance measure following the appeals court’s injunction against the SAVE plan.
- Officials claimed they planned to revise and restore IDR processes in line with the court’s decision, attempting to avoid further legal or administrative conflict.
Timeline and Major Developments
- February 2025: ED disables online access and instructs servicers to stop all IDR and loan consolidation applications, affecting over 1 million borrowers waiting in backlog.
- March 18, 2025: AFT files its lawsuit, demanding reinstatement of all IDR and PSLF functions.
- March 25, 2025: Following emergency motions from AFT, ED restores access to most IDR application forms online, but does not immediately resume full processing, leaving a significant backlog.
- April 2025: Court orders both parties to submit regular status reports detailing progress on pending and processed IDR and PSLF applications; personal stories from affected borrowers highlight ongoing hardship and limbo.
- May–August 2025: ED begins clearing the backlog, focusing on resuming processing for three major IDR plans: IBR (Income-Based Repayment), PAYE (Pay As You Earn), and ICR (Income-Contingent Repayment). SAVE and REPAYE remain blocked pending further court action.
- As of August 2025, the case continues, with periodic court oversight and status updates required, while both sides await a larger resolution regarding the blocked elements of the repayment system.
Broader Impact and What Comes Next
What Does This Mean for Borrowers?
- Many borrowers remain in processing backlogs, delaying or interrupting their access to lower payments and PSLF credit.
- Court-ordered reporting has increased transparency on how many applications are delayed or resolved, but some forgiveness and relief options are still on hold as litigation continues.
- The case may set new legal standards for how federal loan programs must be administered during policy shifts or court injunctions.
Wider Implications
- The lawsuit underscores IDR and PSLF’s essential place in public service and workforce retention—threatened by administrative or political disruptions.
- It also raises concerns about how court rulings and agency compliance are communicated to millions of borrowers, and the roles advocacy groups can play when statutory benefits are suddenly denied.
Frequently Asked Questions
Why did AFT sue the Department of Education?
AFT sued after the Education Department halted access to IDR plans in February 2025, arguing this violated borrowers’ federal rights and left millions unable to apply for affordable payments or earn credit toward PSLF.
Is the IDR system available now?
As of August 2025, most traditional IDR plans (IBR, PAYE, ICR) are available again, though processing remains slow with large backlogs. The SAVE and REPAYE plans are still blocked due to separate ongoing litigation.
What happens next in the lawsuit?
The court is monitoring the situation through required monthly updates from ED. Full legal resolution is pending further court decisions, especially regarding plans blocked by the February injunction.
Does this affect PSLF (Public Service Loan Forgiveness)?
Yes—since PSLF eligibility depends on IDR enrollment and qualifying payments, blocked access or long delays can directly impact individuals pursuing loan forgiveness for public service.
Conclusion
The AFT v. Ed IDR lawsuit is a major moment in student loan reform and legal administration, spotlighting both the essential nature of income-driven repayment for millions and the risks posed by rapid, poorly communicated policy changes. The final outcome will determine how reliably borrowers can count on relief options and set important precedents for future student debt policies.