An increasingly broad chorus of advocates and officials are calling on the Education Department to suspend student loan repayment for millions of borrowers as deepening chaos grips the system . Payments on student loans should be paused, the groups argue, until stability and oversight are restored, and borrowers can properly access the programs and relief that they are legally entitled to.

The department, and Education Secretary Linda McMahon, are increasingly facing criticism for multiple failures across the federal student loan system as officials implement elements of the One Big, Beautiful Act, which Republicans in Congress and President Trump enacted last year. Under the student loan-related provisions of the bill, the government is phasing out the most affordable income-driven repayment plan options and forcing millions of borrowers to move their student loans into more expensive plans, leading to skyrocketing payments. Meanwhile, many borrowers are contending with major disruptions across the student loan system including payment calculation errors, significant application backlogs and processing delays, and erroneous determinations The problems are impacting repayment plans and student loan forgiveness programs alike. And on top of that, false or misleading communications from student loan servicers are causing widespread confusion and frustration.

The Education Department is attempting to implement these unprecedented changes on a diminished staff. The agency eliminated hundreds of positions in the Office of Federal Student Aid, the office that oversees over $1 trillion in federal student loans, during a mass reduction in force last year. The Government Accountability Office also noted in a March report that the department, in part due to the staffing reductions, had halted or diminished its oversight over student loan servicers, sparking criticism. Advocates have argued that the department’s decision to make massive staff cuts and eliminate key oversight functions during a time of major legislative and regulatory reform is a major contributor to the spiraling chaos impacting federal student loans.

Deepening Crisis Grips Federal Student Loans

Earlier this week, more than a dozen state student loan ombudspersons, who are tasked with helping their state residents manage their student loans, called on Secretary McMahon to suspend payments for borrowers in light of the cascading failures across the federal student loan system.

“We have identified recurring systemic problems involving income driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF) that materially affect borrowers’ payment obligations, loan balances, and access to forgiveness,” wrote the ombudspersons in a letter to Secretary McMahon on Tuesday. “To address these issues, we urge the Department to take immediate corrective action, including delaying mandatory repayment plan transitions until these operational failures are fully resolved.”

Borrowers are facing an array of problems related to student loan repayment and loan forgiveness, the ombudspersons wrote, the most acute of which is the Education Department’s rush to force borrowers to move their student loans out of the SAVE plan. The department is giving borrowers 90 days to switch plans or they will be forced into a Standard repayment plan, which can lead to much higher payments and put borrowers at risk of defaulting on their student loans. But the transition is not going smoothly.

“The federal government is now requiring these borrowers to exit forbearance and change repayment plans—a transition that can carry significant consequences, including higher monthly payments, potential capitalization of accrued interest when borrowers later leave certain plans, and loss or delay of statutory repayment and forgiveness benefits,” wrote the ombudsperson group. “Requiring borrowers to make these consequential decisions while significant administrative failures remain unresolved places an unacceptable and unfair risk on borrowers.”

The ombudspersons noted that the worsening failures impacting federal student loans long pre-date the recent forced transition out of the SAVE plan. Student loan servicing transfers, the Covid-19 pause, and near-ongoing changes to the rules governing federal student loan repayment have led to chaos and paralysis across the system for years. But those problems have gotten much worse within the last year, they argued. The ombudspersons cited a number of widespread issues with student loans they have identified through recent complaints from state residents including interest and payment miscalculations, application delays for income-driven repayment and Public Service Loan Forgiveness, misleading or confusing correspondence issued by loan servicers, and rescinded student loan forgiveness credit .

“The failures described in this letter are not isolated,” the ombudspersons wrote. “Before requiring seven million borrowers to transition out of SAVE or recertify for their IDR plans, the Department should ensure that the systems used to process those applications, calculate payments, maintain balances, and track forgiveness progress are accurate and verifiable.”

Borrowers Call For Payment Pause On Student Loans

The letter sent by state student loan ombudspersons this week follows a growing chorus of pleas from borrowers and advocacy organizations to pause student loan payments, as well. Last month, more than 100,000 borrowers signed a petition urging the Education Department to suspend payments on student loans in light of surging payments and widespread processing problems.

“A petition signed by student loan borrowers and advocates calling on the White House and policymakers to pause federal student debt payments and interest reached 130,000 individual signatures,” announced the Student Debt Crisis Center and the Debt Collective, two national student loan borrower advocacy groups, last month. “The petition also demands that any paused months count toward Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) forgiveness timelines, as they did during the federal student loan payment pause at the onset of COVID-19.”

“The need for an immediate pause on federal student loan payments and interest continues to grow in urgency following a pattern of servicing failures including recent erroneous delinquency notices from MOHELA, incorrect repayment calculations, and processing backlogs affecting IDR and PSLF Buyback applications,” wrote the SDCC in another statement in August decrying the department’s recent rollback of PSLF credit for some borrowers, causing some individuals to instantly be set back months or years from being eligible for student loan forgiveness. “Borrowers are being asked to make consequential, irreversible financial decisions inside a system that cannot reliably track progress toward forgiveness they have already earned.”

Lawsuit Seeks To Pause Transition Of Student Loans Out Of SAVE Plan

Meanwhile, a lawsuit challenging the Education Department’s forced removal of student loans from the SAVE plan is ongoing. The challengers argue that the department’s actions amount to a “shadow repeal" of the repayment plan that preceded SAVE, the Revised Pay As You Earn plan (or REPAYE). The challengers are seeking a pause on the department’s efforts to force student loan borrowers to change repayment plans until the litigation is resolved.

“First, defendants decided not to follow the law and revert to the REPAYE repayment plan – established by a valid final rule – without any rulemaking, without considering the relevant data or the reliance millions of borrowers placed on the plan, and without any explanation for its action,” wrote the challengers in their motion for a preliminary injunction filed in June. “This ‘shadow repeal’ of REPAYE made the plan inaccessible despite clear law requiring the agency to revert to the prior existing rule after the vacatur. Second, defendants decided to involuntarily move all borrowers who are currently lawfully enrolled in REPAYE into another repayment plan.”

The challengers are asking the court to block the Education Department from continuing to force student loan borrowers out of SAVE and into other repayment plans, like the Standard plan or Income-Based Repayment. In most cases, payments will be much higher under those plans than they would have been under either SAVE or REPAYE.

“Plaintiffs are asking the court to enforce the status quo – the lawful, unchallenged regulation that requires the defendants to honor the REPAYE plan and allow plaintiffs to remain in REPAYE until the resolution of this case,” wrote the challengers in their motion.

So far, the court has not issued a ruling in the case. As it stands, the Education Department is continuing to notify borrowers in the SAVE plan that they must move their student loans to another income-driven repayment plan or risk being placed involuntarily into a Standard plan. The deadline for the first group of student loan borrowers to apply to change plans is just five days away.