Introduction

As millions of borrowers continue navigating the return to student loan repayment, a new issue has surfaced and it’s affecting people on a massive scale. According to recent federal court filings, more than 300,000 borrowers were denied the ability to switch into an income-driven repayment (IDR) plan, leaving many stuck with higher payments or lingering in forbearance while interest grows.

The numbers are startling: in August alone, the Education Department denied 327,955 applications. And as of late November, more than 800,000 additional requests were still waiting to be processed.

For borrowers counting on IDR plans to keep payments affordable or to continue earning qualifying months toward Public Service Loan Forgiveness (PSLF) and eventual debt cancellation these delays and denials are more than a paperwork issue. They could have long-term financial consequences.

Here’s what’s going on, why so many borrowers were rejected, and what steps you should take if it happened to you.

Why Borrowers Need IDR Plans in the First Place

Income-driven repayment plans are the backbone of affordability in the federal student loan system. These plans:

• Cap monthly payments at a percentage of discretionary income

• Offer forgiveness after 20 or 25 years of qualifying payments

• Serve as a requirement for borrowers pursuing PSLF

• Prevent long-term ballooning balances for lower-income households

With more than 42 million Americans holding student loan debt exceeding $1.6 trillion, access to IDR plans isn’t a luxury it’s essential. So when hundreds of thousands of borrowers can’t access the plan they applied for, advocates immediately take notice.

Why the Applications Were Rejected

According to the court filing, the wave of denials came down to what officials described as an “unforeseen ambiguity” in how applications were interpreted.

Many borrowers had selected the option to be placed in the plan offering “the lowest monthly payment.” But officials argued that two different IDR plans could produce identical monthly payments, creating confusion about which plan should be assigned. Instead of selecting a plan based on existing ranking rules, the Department simply denied the applications outright.

Consumer advocates strongly disagreed with this rationale.

Persis Yu, deputy executive director of Protect Borrowers, explained that federal guidelines already outline which plan should be selected when payments are equal. Higher education analyst Mark Kantrowitz voiced similar concerns, noting that the Department’s justification “did not align with established procedure.”

In short:

Borrowers were denied not because they were ineligible, but because the Department refused to choose a plan for them even though the system already had rules for doing so.

A Legal Battle Behind the Scenes

These status reports stem from an ongoing legal settlement between the American Federation of Teachers and the Trump administration. Earlier this year, the union accused the Department of Education of systematically failing to process IDR applications, delaying relief for hundreds of thousands of borrowers.

Protect Borrowers, serving as legal counsel for the case, required the Department to report its progress which is how the public learned the scale of the recent denials.

What Borrowers Should Do Now

All of this is happening at a time when borrower hardship is already high. More than 5 million people are currently in default, and federal projections suggest that number could double without intervention. Worse, the Education Department has confirmed that wage garnishment for defaulted loans will begin again in January, after a five-year pause.

If you were denied an IDR plan, here are the next steps:

The Bottom Line

Hundreds of thousands of borrowers being denied a repayment plan is a serious administrative failure — but it’s not the end of the road. By reapplying with a clearly selected plan and understanding the shifting repayment landscape, borrowers can still secure an affordable option that protects their financial future and keeps them moving toward forgiveness.