Attorney’s student loan payments quadrupled without warning. She sues Education Dept.
As student loan borrowers across the country report skyrocketing payments amid the White House-orchestrated shakeup of the Department of Education, one Texas attorney is taking her case to the court.
Ashley Morgan said the department and Education Secretary Linda McMahon “(pulled) the rug out from under a student loan borrower” when her payment more than quadrupled without warning, the federal lawsuit filed on March 19 said.
The Austin-based attorney’s monthly payment was $507.19 per month but increased to an “insurmountable” $2,463.58 per month, the lawsuit said.
The lawsuit says others have also been impacted as President Donald Trump continues the long-promised process to shutter the Department of Education through an executive order on March 20.
The sharp increase was caused when the attorney was blocked without warning from recertifying her income, an annual task required to stay on any income-based repayment plan of federal student loans through the Department of Education, the lawsuit said.
When she missed the March 1 deadline because she was unable to access the necessary paperwork, she was automatically removed from any income-based repayment plans and placed on a standard 10-year repayment plan for her six figures of loans, the complaint said.
McClatchy News reached out to the Department of Education but did not immediately receive a response.
Now, the attorney hopes legal action will force the Department of Education to allow her to recertify her income and further provide her access to income-based repayment plans. The lawsuit also asks for an extension to recertify her income since she missed the March 1 deadline.
Did the Department of Education violate any laws?
The attorney cites two acts passed by congress that put income-driven repayment plans into motion decades ago.
The lawsuit accuses the department of violating those two acts — the Student Loan Reform Act of 1993 and the Higher Education Act of 1965.
The Student Loan Reform Act amended the Higher Education Act and established an obligation that the Department of Education would provide income-based repayment plans to federal student loan borrowers.
Throughout the years of income-driven repayment, various plans that typically base payments off of 15% of a borrower’s annual discretionary income, divided by 12, have been available. When Morgan took out her federal student loans to go to Baylor Law School, she signed a Master Promissory Note which included an advisory statement saying she would have the income-driven plan when it came time to repay her loans, according to the lawsuit.
Now, due to recent moves by Trump and the Department of Education, Morgan no longer has that option, the lawsuit said.
The lawsuit says the Department of Education is “abusing” their discretion of the law by preventing her from recertifying her income, removing her from her repayment plan and not providing her with the information she requested, even after she contacted the department, her loan servicer and her representatives.
What happens if borrowers can’t pay inflated payments?
In the lawsuit, Morgan said the approximately $2,400 monthly payment will financially devastate her. She fears that she will have to default on her loans, which could have financially irreparable impacts.
If a person defaults on their student loans, their service provider could take them to court, according to the Office of Federal Student Aid’s website. The lack of payment is also reported to the credit bureaus which could significantly damage a borrower’s credit.
Morgan said her loan servicer offered her forbearance, allowing her to forgo making the inflated payment until June 2025, but her loans are still accruing interest, the lawsuit said. She asked for “administrative forbearance” so her interest would pause, but that request was denied.
The attorney is asking for applications for income-based repayment plans to be reinstated, among other demands, the lawsuit said.
This story was originally published March 21, 2025 at 2:04 PM with the headline "Attorney’s student loan payments quadrupled without warning. She sues Education Dept.."
