Student Loan News for March 2025

Student Loan Changes Are Coming Fast: Here’s What You Need to Know

Student loan policy is shifting rapidly. Between President Trump, the Republican-led Congress, the courts, the Department of Education (DOE), and loan servicers, major decisions are happening at breakneck speed. The result? Chaos, confusion, and plenty of anxiety for millions of borrowers.

Apologies in advance: this might be our longest update yet. But hey, we don’t make the news. We just report it.

Update on the Budget Reconciliation Bill

In a dramatic turn, House Republicans have pushed forward the first procedural vote on their sweeping budget bill. While this doesn’t mean everything in the bill will become law, it’s a significant first step.

Negotiations will likely change in the final version, and there’s still no guarantee it will pass. At this point, it’s unclear if the proposed student loan changes will stick. Nevertheless, we’re watching this closely. Click here for the latest updates on the proposed changes.

“Dismantling” the Department of Education

President Trump’s executive order to dismantle the DOE continues to dominate headlines. While we wait for the next move, we’re already seeing significant changes which may negatively impact borrowers:

• Roughly 50% of staff at the Department of Education is about to be cut.
• 10% of the staff in the Federal Student Aid department (within DOE) have already accepted buyouts.
• Work at the Consumer Financial Protection Bureau has been halted.
• The head student loan ombudsman was fired.
• The Supreme Court case to save the Borrower Defense initiative has been paused by the administration.
• The DOE has paused IDR forgiveness processing…for now.

We’ll keep you updated as this unfolds.

SAVE Plan Ruled Illegal…And It’s Taking Other IDR Plans Down with It

On February 18, the 8th Circuit Court of Appeals issued a ruling that the entire Saving on a Valuable Education (SAVE) plan was illegal. While the case was sent back to the lower court for clarity, this decision effectively puts the nail in the coffin for SAVE.

Unfortunately (for borrowers) the court read further into the history of SAVE and noted that it stemmed from PAYE and ICR before that. The court determined that guaranteed forgiveness at the end of ICR was never the intention of Congress. Therefore, 20/25-year forgiveness under ICR and PAYE is also illegal.

Check out the full story here.

IDR & Consolidation Applications Paused, But Not Gone

If you’ve tried to apply for an IDR plan, consolidation, or recertification recently, you probably noticed the applications are missing. No, IDR plans aren’t disappearing altogether. This is just an administrative response to the SAVE ruling.

Servicers are updating forms to reflect the new landscape, and applications should be back online within 30 days.

Multiple Issues with Loan Payments and Recertification Plans

It’s chaos out there. Servicers must be spinning the big wheel from The Price Is Right to determine what to do with payment plan applications these days. We’ve seen borrowers in just about every plan available…just not the one they signed up for. In short:

• PAYE borrowers are getting recertification notices with unrealistic deadlines, and some without any prior warning.
• PAYE recertifications submitted on time are being ignored, with new notices still going out.
• IDR applications are down, so borrowers who actually want to recertify…can’t.
• Some borrowers who switched from SAVE to PAYE or IBR are being thrown back into the SAVE forbearance months later.

What can you do? Inside sources say servicers have requested permission to extend recertification deadlines. We are hopeful that announcement will be made soon. For those with the wrong payment status, we advise contacting your servicer.

PAYE vs. IBR for New Borrowers

Most people have never heard of IBR for New Borrowers (aka New IBR). The reason why is simple: Congress approved it in 2010, but it wasn’t set to go live until 2014. President Obama decided to jump the gun and issue the PAYE plan in 2012, which was basically a copycat of New IBR. Therefore PAYE became a popular plan among borrowers, and no one really noticed when New IBR quietly came online in 2014.

This little-known plan is about to become very popular, however, due to the SAVE ruling. If you had no federal loans before July 1, 2014, you may qualify for New IBR, which keeps the same payment calculation as PAYE but still allows for 20-year forgiveness. And yes, switching from PAYE to New IBR lets you keep all of your existing IDR payment and forgiveness credit. Check out our dedicated article to see if New IBR might be a good option for you.

Trump Denies PSLF for Certain Borrowers

On March 7th, Trump signed an executive order attempting to block PSLF eligibility for “organizations that engage in activities that have a substantial illegal purpose”. While the major news outlets only tied this EO to activities such as terrorism and illegal immigration, there is a specific clause listed which directly intersects with healthcare:

“(c) child abuse, including the chemical and surgical castration or mutilation of children or the trafficking of children to so-called transgender sanctuary States for purposes of emancipation from their lawful parents, in violation of applicable law;”

If this new EO takes effect, it could have major ramifications for healthcare organizations and providers. However, there are two big problems with this order. First, PSLF is governed by Congress, not the President. Second, many legal experts believe this order violates the First Amendment and will be challenged in court. So don’t panic just yet. We anticipate many lawsuits surrounding this. Additionally, there are much bigger battles taking place around the hot button issue of gender affirming care, of which the outcomes would directly impact this EO.

Please allow us a few days to conduct more research and publish a dedicated article on this very important executive order. This will definitely be a developing story. No one should give up on PSLF just yet. This is far from over.

Don’t forget about those webinars!

Graduation season is around the corner! If you (or someone you know) is finishing a graduate health program this year, don’t miss our free student loan repayment webinars throughout March and April.

Even if you’re already working, these sessions cover the latest policy changes and repayment strategies. And stay tuned! More sessions for working professionals will be added soon.

A Quick Note from the Author

Much of the commentary above reflects negatively on the new administration. As stated before, we are not picking sides. The simple truth is that the party in power believes past student loan policies were too generous, and they want to see more borrowers paying back more of their debt. This translates to higher costs and few repayment options for borrowers. We aren’t going to sugar coat that. Our job is to make sure you have all the facts. So if you need to revisit your game plan for your loans, book a consultation and get expert advice on your best repayment options.