An Austin attorney is taking the federal government to court after a sudden change in student loan repayment rules caused her monthly bill to increase by nearly 400 percent.
Ashley Morgan, a 35-year-old trial attorney who has been enrolled in an income-driven repayment plan for the past eight years, filed a lawsuit this week against the U.S. Department of Education and Education Secretary Linda McMahon.
The suit challenges the department’s abrupt removal of critical forms that allow borrowers to recertify their income and maintain affordable monthly payments.
Trump Aims to Shut Down Education Department
The development comes amid growing chaos in the federal student loan system and a wider political effort to dismantle the agency overseeing it.
President Donald Trump recently signed an executive order aimed at shutting down the Department of Education entirely, a move that critics say could further destabilize repayment systems for tens of millions of Americans.
Don Campbell/The Herald-Palladium via AP
Morgan’s complaint centers on the disappearance of income recertification forms from the DOE website just days before her March 1 deadline. Without the ability to submit her income, Morgan’s monthly payments were recalculated based on outdated or default financial assumptions—jumping from $507 to $2,464 beginning in April.
“When I logged in and I saw that my payments were going to go up in April to over $2,400 a month, my stomach dropped and I just started bawling,” Morgan told KUT. “I didn’t know what I was going to do.”
Though the loan servicer later granted a three-month forbearance, interest continues to accrue, and Morgan is bracing for the full payment to hit in June.
The lawsuit is among the first legal actions to directly challenge the Education Department over its implementation of a February court ruling that blocked the Biden administration’s new repayment initiative, the Saving on a Valuable Education (SAVE) Plan.
Following that ruling, the department removed access to several other longstanding repayment programs without warning borrowers or offering guidance on alternatives.
Morgan is one of an estimated 43 million Americans with federal student loan debt. Like many, she expected to repay her loans under a framework that adjusted monthly costs based on income and family size. The sudden breakdown of that system has left borrowers like her scrambling for answers and legal recourse.
“Basically, no one has answers,” Morgan said. “It just feels like screaming into the void and like none of them care or are going to do anything to protect the millions of student loan borrowers that are on income-driven repayment.”
What Happens Next
Adding to the uncertainty is Trump’s recent executive order aimed at dismantling the Education Department altogether. While the order does not have the force to immediately close the agency—it would require an act of Congress—critics warn that even attempting to do so could jeopardize critical services.
The DOE currently manages a $1.5 trillion student loan portfolio. Shifting that responsibility to another agency would create additional risk of disruption for loan repayment, financial aid processing, and public service forgiveness programs.
In addition to managing debt, the Department of Education enforces civil rights laws in schools and distributes billions in federal aid to low-income students. Without a central agency, those functions could be fragmented or halted altogether, with consequences for both students and institutions.
Morgan’s personal story underscores the fragility of the current system. She is the first lawyer in her family and relied heavily on federal student loans to attend law school. Her current balance stands at over $255,000. “I lived off student loans for eight years while going to school,” she said.
“I think what the Department of Education and the Trump administration don’t understand is that middle-class people don’t have the ability to mess around for three months and try to figure out what to do,” Morgan said. “We just don’t have room in our budgets to do this.”