These denials are for borrowers who chose the lowest monthly payment, which was the now-blocked SAVE Plan.
The Biden-era SAVE Plan, capping payments at 5-10% of discretionary income, has been blocked by courts since June 2024.
Loan servicers cannot process SAVE applications because the plan is currently illegal due to court injunctions.
The Trump administration is phasing out current repayment options and introducing two new plans.
Borrowers previously on SAVE are in forbearance but are encouraged to explore other repayment options for the fall.
Some experts suggest borrowers may not have realized they were applying for the halted SAVE Plan.
Advocates worry these denials will lead to higher payments and longer repayment periods for affected borrowers.