What's happening with forgiveness for student loans on income-based repayment plans?
A recent update from the Education Department said forgiveness through the IBR plan is paused while systems are updated. 'IBR forgiveness will resume once those updates are completed,' the agency said.
IBR is not affected by a federal court's injunction blocking former President Joe Biden's Saving on a Valuable Education, or SAVE, plan. The IBR plan was created by Congress separately from other existing repayment plans, including those known as PAYE and ICR. It's also exempt from some changes coming from President Donald Trump's tax and spending bill.
Here's what to know.
Which income-driven repayment plans are affected by the court's injunction?
Following a court injunction last summer, loan forgiveness for the SAVE, Income-Contingent Repayment, or ICR, and Pay As You Earn, or PAYE, plans is currently paused because those plans were not created by Congress. The legal action called into question whether student loan forgiveness was authorized under the federal statute that governs those plans. The IBR plan was created under a different authority.
IBR, created by Congress, reduces monthly payments for borrowers with lower incomes. It also invokes a statute that authorizes student loan forgiveness of the balance at the end of a 20- or 25-year repayment term.
When will IBR forgiveness resume?
The Education Department hasn't given a timeline for when its system update will be complete and forgiveness will resume.
Should a borrower continue to make IBR payments in the interim?
Borrowers enrolled in IBR who have reached the threshold for forgiveness but who are not seeing their loans discharged as a result of the pause may continue to make payments with the expectation that the Education Department will refund the excess payments. The plan offers forgiveness after 240 or 300 monthly payments, depending on when borrowers enrolled.
Borrowers can also request forbearance from their loan servicer. In that case, interest would continue to accrue on any remaining balance.
What changes are coming from Trump's 'big beautiful bill'?
Trump's tax and spending law will eventually phase out the ICR, PAYE and SAVE plans, replacing them with the Repayment Assistance Plan. IBR plans will continue to exist and to provide forgiveness after 20 or 25 years. RAP, in contrast, will require 30 years of repayment before forgiveness is granted.
___
The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
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The US sources most of its coffee from Brazil, which is set to face 50% tariffs on its products on Aug. 1, and Colombia, which faces a tariff rate of 10%. In Keurig's coffee business, appliance volume decreased 22.6% during the quarter, reflecting impacts of retailer inventory management, and K-Cup pod volume decreased 3.7%, reflecting category elasticity in response to price increases, the company reported. "Our retail partners will likely continue to manage their inventory levels tightly, in particular on brewers," Cofer commented. "And then finally, you know we did a round of pricing at the beginning of the year. We've announced another round of pricing that will take effect next month, and we'll need to closely monitor how that elasticity evolves." Read more about Keurig earnings here. Keurig Dr. Pepper CEO Tim Cofer said that tariffs are putting additional pressure on the company in an earnings call Thursday, especially when it comes to its coffee business, which KDP expects to be "subdued" for the remainder of the year. "Commodity inflation will build as we roll into the back half and we roll into our higher cost hedges on green coffee," Cofer said. "The tariff impacts will become prominent. And we all know that tariff situation is a bit fluid." Keurig is one of the biggest coffee importers in the US, along with Starbucks (SBUX) and Nestle (NSRGY). The US sources most of its coffee from Brazil, which is set to face 50% tariffs on its products on Aug. 1, and Colombia, which faces a tariff rate of 10%. In Keurig's coffee business, appliance volume decreased 22.6% during the quarter, reflecting impacts of retailer inventory management, and K-Cup pod volume decreased 3.7%, reflecting category elasticity in response to price increases, the company reported. "Our retail partners will likely continue to manage their inventory levels tightly, in particular on brewers," Cofer commented. "And then finally, you know we did a round of pricing at the beginning of the year. We've announced another round of pricing that will take effect next month, and we'll need to closely monitor how that elasticity evolves." Read more about Keurig earnings here. The EU's Trump insurance As my colleague detailed below, EU member states voted to impose tariffs on over $100 billion of US goods from Aug. 7. The Financial Times reported that this move that allows the bloc to impose the levies quickly at any point in the future should its trade relationship with the US take a turn for the worse. From the report: Read more here (subscription required). As my colleague detailed below, EU member states voted to impose tariffs on over $100 billion of US goods from Aug. 7. The Financial Times reported that this move that allows the bloc to impose the levies quickly at any point in the future should its trade relationship with the US take a turn for the worse. From the report: Read more here (subscription required). Europe approves $100B-plus tariff backup plan A report in the Wall Street Journal on Thursday said that the European Union has now approved its retaliatory tariff package on US goods that could start in August if no trade agreement is reached. The EU announced on Wednesday that it will hit the US with 30% tariffs on over $100 billion worth of goods in the event that no deal is made and if President Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after Aug. 1. The US exports, which would include goods such as Boeing (BA) aircraft, US-made cars and bourbon whiskey would all face heavy tariffs that match Trump's 30% threat. The approval of the package comes despite the growing optimism that the US and EU will reach a deal that would put baseline tariffs on the bloc at 15%, matching the level the US applied to Japan. The EU is keen to reach a deal with the US but as a cautionary measure has approved 30% tariffs if a deal is not made. A report in the Wall Street Journal on Thursday said that the European Union has now approved its retaliatory tariff package on US goods that could start in August if no trade agreement is reached. The EU announced on Wednesday that it will hit the US with 30% tariffs on over $100 billion worth of goods in the event that no deal is made and if President Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after Aug. 1. The US exports, which would include goods such as Boeing (BA) aircraft, US-made cars and bourbon whiskey would all face heavy tariffs that match Trump's 30% threat. The approval of the package comes despite the growing optimism that the US and EU will reach a deal that would put baseline tariffs on the bloc at 15%, matching the level the US applied to Japan. The EU is keen to reach a deal with the US but as a cautionary measure has approved 30% tariffs if a deal is not made. Trump tariffs wreaking havoc in Brazil's citrus belt Reuters reports: Read more here. Reuters reports: Read more here. South Korea weighs US investment pledge to trim auto tariff Trade discussions between the US and South Korea have led both sides to investigate the idea of creating a fund to invest in American projects. A report said this possible deal would be similar to the agreement Japan struck Tuesday with President Trump. The details of the plan are still not clear, but the US has been seeking pledges totaling hundreds of billions of dollars. However, further talks on a deal between the two sides may have to wait as a trade meeting between the US and South Korea has been postponed after Treasury Secretary Scott Bessent became unavailable due to a scheduling conflict, South Korea's Finance Ministry said Thursday. Bloomberg reports: Read more here. Trade discussions between the US and South Korea have led both sides to investigate the idea of creating a fund to invest in American projects. A report said this possible deal would be similar to the agreement Japan struck Tuesday with President Trump. The details of the plan are still not clear, but the US has been seeking pledges totaling hundreds of billions of dollars. However, further talks on a deal between the two sides may have to wait as a trade meeting between the US and South Korea has been postponed after Treasury Secretary Scott Bessent became unavailable due to a scheduling conflict, South Korea's Finance Ministry said Thursday. Bloomberg reports: Read more here. Hyundai Motor warns of bigger hit from US tariffs after Q2 profit fall Hyundai Motor ( HYMTF) reported a drop in second-quarter operating profit on Thursday. The company cited US tariffs on vehicles and parts as the reason for the decline and that President Trump's trade war had weighed on its bottom line, the automaker also warned of a bigger impact in the current quarter. The group's South Korean shares fell 2% Thursday. Reuters reports: Read more here. Hyundai Motor ( HYMTF) reported a drop in second-quarter operating profit on Thursday. The company cited US tariffs on vehicles and parts as the reason for the decline and that President Trump's trade war had weighed on its bottom line, the automaker also warned of a bigger impact in the current quarter. The group's South Korean shares fell 2% Thursday. Reuters reports: Read more here. Trump lifts tariff baseline rate, warns countries face 15-50% range President Trump appears to have raised the minimum US tariff rate to 15%, up from 10%, as he prepares to set new reciprocal tariffs before his Aug. 1 deadline. 'We'll have a straight, simple tariff of anywhere between 15% and 50%,' Trump said Wednesday at an AI summit in Washington. 'A couple of — we have 50 because we haven't been getting along with those countries too well.' Trump's latest statement that tariffs would begin at 15% is a new twist in his efforts to impose duties on almost every US trading partner. The US and Japan reached a trade agreement this week of 15%, which could be one reason why the US president has decided to increase the baseline tariff rate. The European Union said on Wednesday that it is getting ready to impose 30% tariffs on over $100 billion worth of US goods if no deal is made and if Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after the Aug. 1 deadline. Reports from The Financial Times on Wednesday have said that the EU and the US are now closing in on a 15% trade deal on European imports. Bloomberg News reports: Read more here. President Trump appears to have raised the minimum US tariff rate to 15%, up from 10%, as he prepares to set new reciprocal tariffs before his Aug. 1 deadline. 'We'll have a straight, simple tariff of anywhere between 15% and 50%,' Trump said Wednesday at an AI summit in Washington. 'A couple of — we have 50 because we haven't been getting along with those countries too well.' Trump's latest statement that tariffs would begin at 15% is a new twist in his efforts to impose duties on almost every US trading partner. The US and Japan reached a trade agreement this week of 15%, which could be one reason why the US president has decided to increase the baseline tariff rate. The European Union said on Wednesday that it is getting ready to impose 30% tariffs on over $100 billion worth of US goods if no deal is made and if Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after the Aug. 1 deadline. Reports from The Financial Times on Wednesday have said that the EU and the US are now closing in on a 15% trade deal on European imports. Bloomberg News reports: Read more here.
