Education Department Reopens Student Loan Payment Plans

In the best news for student loan borrowers since the Trump Administration took office, the U.S. Department of Education told a federal court on March 25 that it had reopened borrowers’ online access to income-driven repayment (IDR) plans for federal student loans.

The country’s largest labor union, the American Federation of Teachers (AFT), had filed a lawsuit against the Department in the U.S. District Court for the District of Columbia on March 18. As an organization made up of a large proportion of student loan borrowers, the teachers’ union went to court after ED had suspended borrowers’ online access to income-driven repayment plans and loan consolidation applications three weeks prior to the filing.

Because IDR plans tie monthly student loan payments to a borrower’s income, they reduce payment amounts. But shutting down that website had subjected borrowers to large spikes in their student loan bills, with no way for millions of them to switch to more affordable repayment plans.

On March 24, AFT filed a motion for a temporary restraining order (TRO) and a preliminary injunction to compel the Department to reactivate online access to the payment plans. After attorneys for AFT filed their motion, Justice Department lawyers defending the Department of Education told the court that the Department would take steps as soon as March 26 to reopen the IDR website. However, ED’s attorneys also said that they would not immediately resume processing the applications filed through the website.

In February, the Education Department had quietly directed its subcontractor loan servicing firms, like MOHELA and Navient, to shut down all their income-driven repayment plan processing. According to the complaint that AFT filed with the court, ED sent the servicing firms a “stop work order,” while at the same time the Department also stopped borrowers from applying through the IDR website or downloading printable application forms they could fill out by hand and send through postal mail.

A February 2025 order by the Eighth Circuit Court of Appeals expanded an August 2024 nationwide injunction that had suspended the operations of another income-driven repayment plan, the SAVE Plan, launched in 2023 by the Biden Administration. By the time of the appellate court’s order, eight million borrowers had enrolled in the popular SAVE Plan, which promised lower payments, shorter loan terms, and more student loan forgiveness of remaining balances than the older IDR plans.

However, the court stopped short of blocking or ending two IDR plans related to the SAVE Plan, the Pay as You Earn (PAYE), and Income Contingent Repayment (ICR) plans. The court also did not interfere with the operations of two payment plans that were mandated by acts of Congress, the Income-Based Repayment (IBR) plan and the Public Service Loan Forgiveness (PSLF) Program. That was the same PSLF program targeted by a presidential executive order early in March, which we covered in our article “Student Loan Forgiveness: ‘See You in Court’ Say PSLF Advocates.”

Yet the Education Department’s “stop work order” shut off all four of the IDR plans, even though there was no apparent reason why it was necessary to take the three programs unaffected by the court’s ruling offline at the same time. The order also stopped borrowers from routinely filing their annual reenrollments under the PSLF program, because each PSLF borrower also has to enroll in an income-driven repayment (IDR) plan. When those borrowers didn’t re-enroll on time, the software reset their accounts from IDR to standard payment plans, which resulted in much larger bills.

The motion for the temporary restraining order asked the court to order the Education Department to reopen the three non-SAVE IDR payment plans using a two-pronged strategy.

First, as a union made up of members who mostly work for public school districts and have a large percentage of members enrolled in the Public Service Loan Forgiveness Program, AFT argued that the Education Department is statutorily required by language in the Higher Education Act to make the three IDR plans available to borrowers. Their motion says:

Without Congressional authorization, the defendants have inexplicably and irrationally issued a Stop Work order shutting down all access to all income-driven repayment plans for borrowers seeking to enroll. Millions of student loan borrowers are being denied Congressionally-mandated student loan repayment and forgiveness programs, simply because the defendants have unlawfully ceased to accept and process enrollment applications.

Second, the AFT alleged that shutting down the website also violated the Administrative Procedure Act (APA), which governs how federal agencies must execute rules and policies. The union argued that the suspension lacked legal justification, constituted an arbitrary and capricious agency action, and harmed millions of borrowers—particularly public service workers like teachers and nurses who rely on the IDR payment plans and PSLF program.

AFT’s motion then references six sworn declarations filed by borrowers who are union members. Several testify that because they had been blocked from applying for lower payments available through the IDR plans, their monthly student loan bills had skyrocketed, such that they were having trouble paying for basic necessities like childcare and housing. One couldn’t sleep and had been experiencing panic attacks.

Although the average student loan borrower carries about a $30,000 balance, all the AFT affiants appear to be carrying balances larger than $50,000. That means they need access to IDR plans because they probably couldn’t afford the larger payments under standard repayment plans.

Dr. Picolya McCall-Robinson—a college professor with a PhD from Southern California—testified she was carrying more than $580,000 in student loan debt. “My student loan debt has held me hostage for over 25 years now,” she testified. “Every decision I make, such as buying a home or taking a new job in another country, is tethered to my student loans. In 2020, I attempted to buy a home for myself and my children, but was denied because of my student debt.”

Also filing an affidavit was Sarah Tammelleo, one of AFT’s senior executives, who testified in her professional capacity. She explained how the union has suddenly been required to reallocate its resources away from usual activities to help members manage their loans.

“AFT has dedicated tens of thousands of dollars and over two thousand hours of valuable staff time toward helping its members with their student loans,” Tammelleo writes. “These resources could have been used for other work that the union undertakes. . .but our members have made it clear that they need help with their student loans.”

She ends her affidavit by describing the union’s payments to a technology firm known as Summer:

The AFT was preparing to end a multi-year contract with a technology company called Summer, which provides direct services to members with student debt. Due to the uncertainty and lack of communication from the [Department of Education], AFT staff have had a significant increase in communication from members seeking help.

AFT has been unable to educate and advise members, and the union has had to reallocate resources totaling $250,000.00 and extend the contract through June 2026.

Multiple references to Summer in the court documents sparked our curiosity about this startup and what sorts of value Summer was delivering to AFT that would justify a quarter of a million dollars as an annual subscription payment. On its website, AFT says “Summer harnesses the expertise of public policy experts to optimize borrower options, and it uses technology to make the process easy and secure. The AFT trusts Summer to help our members navigate the student loan repayment landscape.”

It turns out that New York-based Summer develops an online student loan and education assistance platform, typically purchased by employers as a perk for their employees. The firm says it helps employees better manage their student loans, find forgiveness options, and lower monthly payments.

Summer claims in its press materials that it “saves employees an average of $40,000” while helping to reduce turnover. It also says that as of July 2024, the firm was working with 900 employers across the United States and had saved employees $1.7 billion since its launch in 2017. One customer is Hurley Medical Center in Flint, Michigan, which says it bought access to Summer’s platform to simplify enrolling several employees in PSLF and related federal programs.

Before Summer, CEO Will Sealy had worked as a campaign assistant to Massachusetts Senator Elizabeth Warren, followed by two years as a student loan policy expert for the Consumer Financial Protection Bureau in Washington. Sealy then founded Summer after graduating with an MBA from the Yale School of Management. His venture-backed startup closed a $9 million funding round led by Rebalance Capital and SemperVirens in April 2024.

Summer isn’t the only player in the student loan and education benefits market space. Another New York software startup that calls itself Candidly also offers a “financial wellness” platform that provides tools for optimizing student loan repayment, maximizing savings, and enhancing financial resilience. Apparently, all the upheaval in student loans must be good for this sector’s business.

Even though the Department of Education said it wouldn’t immediately restart processing IDR applications, the website form and paper applications were back online as of March 27. Meanwhile, AFT’s President Randi Weingarten posted an upbeat statement.

“Today’s announcement shows that when working people band together and demand justice, we can make progress,” she said. “Today, the federal government took a step because of our lawsuit to restore some borrowers’ rights. More must be done, but at the very least, the applications for IDR plans will be online and accessible.”