Student Loan Repayment Update: IDR Processing Resumes with Major Clarification on Spousal Income – April 16, 2025

Key Highlights:

Student Loan Repayment Updates: The U.S. Department of Education has issued a critical update that affects millions of federal student loan borrowers, particularly those in income-driven repayment (IDR) plans. After a months-long suspension of application processing, the department confirmed that it has resumed IDR processing for certain borrower groups, with full resumption expected by May 10, 2025.

IDR Processing Resumes After February Freeze

According to a Department of Education announcement on April 11, the processing of IDR applications—specifically for Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), and Pay As You Earn (PAYE) plans—has resumed only for borrowers filing taxes as single or married borrowers reporting no income.

These updates were confirmed by MOHELA, one of the department’s contracted loan servicers. However, the majority of applications remain on hold until full-scale processing resumes.

May 10 Deadline Set for Full Resumption – Student Loan Repayment

The Department expects loan servicers to resume full IDR processing by May 10, 2025. This includes applications from borrowers who are currently in SAVE plan forbearance and want to switch to alternative IDR plans to continue progressing toward loan forgiveness under either the IDR pathway or Public Service Loan Forgiveness (PSLF).

Clarification on Spousal Income Sparks Relief

Initially, a Department declaration had alarmed borrowers by implying that spousal income would be considered in monthly payment calculations for ICR, IBR, and PAYE—even for married borrowers filing separately. This would have resulted in significantly higher monthly payments for many.

However, in a revised declaration issued April 15, the Department clarified:

• Spousal income will NOT be included in payment calculations for married borrowers filing separately or those separated from their spouse.
• Spouses will still be counted in family size, which affects the income threshold for IDR calculations.

This reversal brought relief to thousands of borrowers, particularly those in complex tax filing situations.

Context: Legal and Administrative Turmoil

These developments follow a turbulent few months:

• In February 2025, a federal appeals court ruling paused SAVE plan-related IDR processing.
• In March, the American Federation of Teachers (AFT) filed a lawsuit alleging that the shutdown of IDR applications was unlawful.
• The Department’s latest actions are in response to this lawsuit and mounting public pressure.

Additionally, the Trump administration’s downsizing of the Department of Education and broader reforms have raised concerns about the future of loan forgiveness programs and the stability of student aid services.

Implications for Borrowers: What to Do Now

If you’re a federal student loan borrower, here’s how to navigate the latest developments:

✅ If You’re in SAVE Plan Forbearance:

• Consider switching to PAYE, IBR, or ICR to resume eligibility for IDR or PSLF forgiveness.
• Full servicing should resume by May 10, but begin preparations now.

✅ If You’re Married and Filing Separately:

• You will not have spousal income counted in your monthly repayment calculation.
• Your spouse will be included in household size, slightly raising the income threshold.

✅ If You’re Waiting on Processing:

• Log into your StudentAid.gov account and check the status of your servicer.
• Contact MOHELA or your assigned servicer for real-time updates.
• Document all correspondence to prepare for potential retroactive adjustments.

Broader Concerns and Legal Challenges

The ongoing SAVE plan litigation, growing fears about the dismantling of the Department of Education, and inconsistent servicing experiences suggest borrowers must stay vigilant. Additional court rulings or policy reversals could arise before or after the May 10 deadline.

With student loan repayment policy in flux, borrowers are advised to remain informed, proactive, and legally aware. The reinstatement of IDR processing, coupled with the clarification on spousal income, represents progress—but the road ahead remains uncertain amid political shifts and administrative constraints.

Stay connected to StudentAid.gov, your loan servicer, and credible reporting for accurate updates.

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