The income-driven repayment application system for federal student loans remains a mess, as borrowers struggle to navigate programs that have been plagued by legal challenges and processing pauses. Now, one major student loan servicer has thrown an additional wrench into the system by announcing that some borrowers who have already submitted an income-driven repayment application may need to reapply.
Income-driven repayment (or IDR) plans offer borrowers affordable monthly student loan payments based on their income and family size. IDR is a category of repayment plans that encompasses several specific programs including Income-Contingent Repayment, Income-Based Repayment, Pay As You Earn, and Saving on a Valuable Education. These plans are often referred to by their acronyms – ICR, IBR, PAYE, and SAVE, respectively. Payments under all of these plans are typically recalculated every 12 months, and the payments can change over time as a borrower’s income changes.
IDR plans historically have also provided pathways to student loan forgiveness. Typically, borrowers can qualify for loan forgiveness after 20 or 25 years in repayment. That timeline can be reduced to as little as 10 years for borrowers working in nonprofit or government jobs, as enrolling in IDR plans is usually required for borrowers pursuing Public Service Loan Forgiveness, or PSLF.
But the IDR application system has been in turmoil for most of this year. And now, some borrowers won’t even realize that they may need to submit a new IDR application, which MOHELA – one of several major student loan servicers contracted with the Department of Education – announced certain borrowers will need to do. Here’s what you should know.
IDR Applications In Turmoil After Student Loan Borrowers Blocked From Accessing Affordable Payments
The problems with the IDR system began with a lawsuit filed last year against the Biden administration over the SAVE plan. The challenge brought by a coalition of GOP-led states argued that the SAVE plan was an abuse of executive branch authority and exceeded what Congress had authorized when it passed legislation creating income-driven plans for federal student loans more than 30 years ago. Last summer, a federal appeals court blocked the SAVE program, throwing the entire IDR system into disarray and forcing more than eight million borrowers who had enrolled in SAVE into a forbearance.
Then, in February of this year, the court expanded that earlier injunction, injecting even more chaos and uncertainty into the federal student loan repayment system. In response, the Trump administration temporarily suspended the entire IDR application system, arguing that it had no choice due to the breadth of the court’s order.
“The latest court actions significantly affect preexisting ED rules on its loan programs and IDR plans,” said the Department of Education in web guidance provided to borrowers. “The most recent court actions require a pause to everything”
The department subsequently restored the IDR application and resumed processing, but only after the American Federation of Teachers filed a lawsuit in March, arguing that the systemwide IDR application and processing suspension was unlawful and had illegally prevented borrowers from accessing affordable payments and student loan forgiveness programs authorized by Congress. Because of the shutdown, borrowers could not enroll in an IDR plan, recertify their income, apply to switch IDR plans or leave the SAVE plan forbearance, which has halted student loan forgiveness progress for more than eight million Americans.
The AFT and the Trump administration then reached an agreement in April to pause the litigation to give the Department of Education time to ramp up IDR application processing. Borrowers could submit IDR applications again by the end of March, but processing did not fully resume until early May. Under the terms of the interim agreement, the department must file monthly status reports detailing loan servicers’ progress in processing IDR applications. As of the May 15 status report, more than 1.9 million IDR applications remained outstanding.
Student Loan Servicer Announces That Some Borrowers Should Reapply For IDR
The Department of Education has been accepting IDR applications since the online form was restored at the end of March. But this month, MOHELA – one of the department’s major contracted loan servicers – announced on its website that borrowers who submitted an IDR application prior to April 27, 2025 may need to reapply.
“Good news! Processing has resumed for IBR, PAYE, and ICR plans,” says the MOHELA announcement. “Thanks to system updates, MOHELA can now quickly process applications with verified income. If you applied before April 27, 2025, your application didn’t include income info. Please reapply at StudentAid.gov for faster processing. Your old application will then be canceled automatically.”
MOHELA provided no additional details as to why borrowers who applied for IDR before April 27, 2025 would need to reapply, particularly those who did include income documentation with their application. No other Department of Education loan servicer (including Nelnet, Edfinancial, or Aidvantage) appears to have a similar message posted on their own websites.
MOHELA has in the past been accused of providing misleading information to federal student loan borrowers. The servicer was penalized by the Biden administration for allegedly providing untimely or incorrect billing statements when student loan repayment resumed after the pandemic-era pause. More recently, MOHELA sent out misleading letters to borrowers in the SAVE plan forbearance, falsely suggesting that interest has been accruing on their balances. This prompted MOHELA to issue a clarifying statement on its website.
Which Student Loan Borrowers Should Reapply For IDR
The big question for many federal student loan borrowers is whether they actually need to reapply for IDR, particularly if they submitted an application prior to April 27, 2025, the cutoff date referenced in MOHELA’s announcement. MOHELA’s statement suggests that IDR applications submitted online through StudentAid.gov will be processed quickly, but it’s unclear if that is actually happening (particularly without first evaluating the Department of Education’s next scheduled court-mandated IDR status update, which isn’t due until later this month). Here are some important considerations:
- For borrowers who applied for IBR, ICR, or PAYE on or after April 27, 2025, no action should be necessary. Borrowers may be placed into a processing forbearance for up to 60 days while their application is reviewed. This processing forbearance period can count toward student loan forgiveness under the PSLF program.
- For borrowers who have student loans serviced by MOHELA and applied for IBR, ICR, or PAYE prior to April 27, 2025, but did not include any income information or documentation with their applications, reapplying may be prudent, as a loan servicer cannot calculate your IDR payment without appropriate documentation of income. The best way to reapply would be via the Department of Education’s website at StudentAid.gov.
- Borrowers who submitted an IDR application prior to April 27, 2025 and selected either the SAVE plan or the “lowest monthly payment” option may need to reapply. “SAVE and ‘lowest monthly payment’ requests are still on hold, and loans will stay in an administrative forbearance” if borrowers selected either of those options, says MOHELA. These options aren’t available on the updated IDR application released this spring, but they were available selections on prior versions of the form.
For federal student loan borrowers with MOHELA-serviced loans who applied for IBR, ICR, or PAYE prior to April 27, 2025, and who properly included income documentation with their IDR application, the situation is less clear. MOHELA’s statement on its website suggests these borrowers should reapply, but does not explain why, other than saying the applications did not include income documentation. Borrowers in this situation may want to contact MOHELA for clarification before submitting a new IDR request. However, reaching MOHELA may be difficult – Senator Elizabeth Warren (D-Mass) told Education Secretary Linda McMahon in a letter in March that the Department of Education had found that “MOHELA took longer to answer borrowers’ phone calls than any other federal loan servicer.”
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