The education department income-driven repayment (IDR) lawsuit centers on legal challenges against the U.S. Department of Education (ED) following its suspension of income-driven student loan repayment plan applications and processing in early 2025. The lawsuit was principally filed by the American Federation of Teachers (AFT), a major teachers’ union, accusing the Department of unlawfully blocking access to affordable repayment options, disrupting millions of borrowers’ ability to enroll in plans that tie monthly payments to income and family size. This case highlights critical issues about student loan debt relief, federal agency authority, and borrowers’ rights to manageable loan payments.
Background and Origins of the Lawsuit
In February 2025, after a ruling by the U.S. Court of Appeals for the Eighth Circuit that blocked the Biden administration’s “Saving on a Valuable Education” (SAVE) Plan and cast doubt on other IDR plans, the Department of Education removed income-driven repayment applications from its website and halted all related application processing. This action effectively denied borrowers the ability to apply for or change their IDR plans, including historically offered plans like Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR).
The AFT filed the lawsuit on March 17, 2025, in federal court in Washington, D.C., asserting that the Department’s suspension was illegal and harmed borrowers, especially public service workers who rely on IDR plans not only for affordable payments but also to qualify for Public Service Loan Forgiveness (PSLF). The union claimed the Department broke the student loan system by disrupting repayment options without lawful authority and jeopardizing borrowers’ progress towards debt relief.
Key Allegations and Legal Claims
- Unlawful Suspension: The Department of Education unlawfully took down IDR applications and ordered servicers to stop processing them, denying borrowers access to federal benefits to which they are entitled.
- Violation of Borrower Rights: The actions effectively locked out millions of borrowers from managing their repayment plans or securing affordable monthly payments.
- Impact on Public Service Loan Forgiveness: Blocking IDR applications halted progress toward PSLF for public workers, undermining legislated relief programs.
Legal Proceedings and Developments
Since the lawsuit’s filing, the Department of Education has faced court orders and public pressure to restore IDR application access. The online application was reinstated on March 26, 2025; however, processing was delayed, with approvals lagging behind applications, resulting in a substantial backlog exceeding 1.9 million pending requests as of April 2025. Borrowers remain caught in a system with significant delays, accruing interest without receiving promised loan relief credits.
Court oversight includes monthly reporting mandates on application status and program administration. The legal challenge continues as courts review the scope and legality of the Department’s actions post-Eighth Circuit ruling, while the entire matter returns for further litigation in the lower district court.
Broader Implications for Borrowers and Federal Policy
The lawsuit underscores the fragility of student loan debt relief programs amid political and judicial challenges. Millions of borrowers rely on IDR plans for manageable payments and debt forgiveness timelines. Disruptions risk financial instability and delay relief outcomes, intensifying public frustration with federal student loan management.
Beyond this lawsuit, ongoing debate surrounds the Department of Education’s authority to design and implement repayment plans like SAVE, the validity of court injunctions that halted such programs, and the eventual restoration or reform of student loan repayment options. Policymakers, advocates, and borrowers alike monitor these developments closely for their impact on the future of student loan debt relief.
Frequently Asked Questions About the Education Department’s Income-Driven Repayment Lawsuit
Why was the income-driven repayment application suspended?
Following a February 2025 federal appeals court ruling blocking the SAVE Plan, the Department of Education removed access to IDR applications and instructed loan servicers to stop processing them to comply with the court order.
Who filed the lawsuit against the Education Department?
The American Federation of Teachers (AFT) filed the lawsuit, with support from borrower advocacy groups, challenging the suspension as illegal and harmful to borrowers’ rights.
What is the impact on borrowers?
Millions of borrowers have been unable to apply for or renew income-driven repayment plans, causing increased financial strain, delayed debt forgiveness, and jeopardized progress toward Public Service Loan Forgiveness.
Has the Department of Education restored IDR applications?
Yes, the online application was restored in late March 2025, but a significant backlog remains, and application processing has been slow, leaving many borrowers waiting for approval.
What is the status of the SAVE Plan?
The SAVE Plan remains blocked by court injunctions while litigation continues over its legality; meanwhile, borrowers may revert to earlier IDR plans with fewer benefits.
Conclusion
The education department income-driven repayment lawsuit highlights intense legal and policy struggles over student loan repayment access and federal authority. It reflects the ongoing fight for affordable, accessible repayment programs that provide relief to millions burdened by education debt. As litigation and policy discussions evolve through 2025, the outcome will significantly influence the administration of federal student loans, the viability of income-based plans, and the prospects for meaningful debt relief for borrowers across the United States.
