Some student loan payments skyrocket as millions of income-based payment plans halted

There's an overwhelming sense of uncertainty looming over Hannah Cotreras' future. This has made a permanent lump in my throat. Her monthly federal student loan payments skyrocketing. My student loan payment has gone up $905. Every month. While it might sound like something a loan shark would do, doubling or tripling payments without notice, it's actually because of a dramatic change at the Department of Education. Not from staffing cuts, not even DOJ, but a broad interpretation of a court order. Some student loan repayment plans based on income are suddenly halted, affecting 13 million borrowers, according to the National Consumer Law Center. It's all in response to ongoing litigation over what the Biden administration called the Saving on a Valuable Education, or SAVE, plan, where monthly payments are based on income and family size. Borrowers who've made the required number of payments in the SAVE plan would normally be eligible to have their remaining balance canceled. Last year, several conservative-leaning states challenged the plan, saying it would require spending up to $475 billion not authorized by Congress. And a recent temporary order by the Eighth Circuit Court in Missouri broadened the scope of the case to some other income-based plans, too. In response to the court order, the Department of Education, without any explanation, simply pulled down all of the applications for the income-driven repayment plans. We reached out to the Department of Education for comment, but have yet to hear back. On the website, it says applications are temporarily unavailable due to the court's injunction. Consumer law experts like Abby Safroth say the DOE is going further than it needs to. It could keep allowing borrowers to apply for and to stay in the other plans. Now Contreras, with her monthly payments soaring and no increase in salary, is trying to figure out what's next. I did everything I was supposed to so that I could be in the desk I'm in right now, and yet I may have been better off doing something different. She's a mother of two with a master's degree. Today, she's working as a therapist in a community mental health clinic in Oregon. She says it's important work, but it doesn't come with a large paycheck. I can pay the loans. I never said I couldn't pay them. I just said I need to be able to do it in the ways we were told when we were 18 that we would be able to. Contreras and many more looking for clarity as their options seem narrower than ever. Rahama Ellis is joining us now. So Rahama, what are the options now for borrowers like Contreras? Well, they're not great for many people, but we should say those who are under the Biden-era income plan, they already have an option, and that is that their payments have been paused since last year with no interest accruing, and that's a result of the lawsuit that has been, we talked about earlier. But those borrowers who are part of some other options, payment plans, well, they can also have their payments paused. But, Hallie, here's the rub. The interest continues to accrue month after month after month. So that means that they're going to owe a lot more money at the end of all of this when they finally do make a payment. And you have to ask yourself, people have to ask themselves, what are they going to do? Do they find the money from somewhere, dig deep to find the money to make the payments now and to make the, so the interest stays reasonable, if you will, or to pause the payments, those interest payments go up and they're going to have to deal with a much bigger bill down the road. Hallie? Rahima Ellis, thank you very much for that report.