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APThe Trump administration reached an agreement with the American Federation of Teachers to approve student debt cancellation for millions of borrowers who continually make their regular payments. Millions of student loan borrowers heaved a huge sigh of relief after the Trump administration said it is cancelling student debt for millions of borrowers — a pivot from its previous moves to block some loan forgiveness plans. The Trump administration has confirmed its agreement to cancel student loan debt for eligible borrowers under certain plans, following a legal agreement between the American Federation of Teachers (AFT) and the Department of Education.The latest decision is seen as a big policy change for the Trump administration which previously paused or restricted student debt relief through federal income-driven repayment programs. Around 2 to 2.5 million borrowers are either directly enrolled in qualifying plans or were affected by policy shifts in 2025, and the resumption of debt cancellation offers financial relief and legal clarity to Americans who have spent decades making payments on federal student loans, according to NewsWeek.Student debt loan to be forgivenThe Trump administration reached an agreement with the American Federation of Teachers to approve student debt cancellation for millions of borrowers who continually make their regular payments. The AFT and Department of Education came to an agreement Friday to begin cancelling student loans for borrowers enrolled in income-driven repayment plans, according to a joint status report filed the same day.ALSO READ: Salesforce CEO's big confession on AI after replacing 4,000 employees with Artificial Intelligence agents“This is a tremendous win for borrowers. With today’s filing, borrowers can rest a little easier,” Winston Berkman-Breen, legal director for Protect Borrowers, which acted as counsel for the teachers’ union, told NY Post. Live EventsAfter months of court battles, the Trump administration however pivoted and allowed for the return of the programs under Friday’s agreement. “For nearly a decade, the AFT has fought for the rights of student loan borrowers to be freed from the shackles of unjust debt—and today, a huge part of that affordability fight was vindicated,” AFT President Randi Weingarten said in a statment.“This year, we took on the Trump administration when it refused to follow the law and denied borrowers the relief they were owed. Our agreement means that those borrowers stuck in limbo can either get immediate relief or finally see a light at the end of the tunnel.”ALSO READ: Reversing prediabetes without weight loss: These simple lifestyle changes and fat distribution can cut diabetes risk by 70 percentDo you qualify for student loan forgiveness?The AFT in a press release said the agreement covers all of those in enrolled in income-based repayment, income-contingent repayment, pay-as-you-earn payment plans, and the Public Service Loan Forgiveness program. Eligible borrowers must make a set number of minimum payments required under their respective repayment plans before their debt is forgiven. The Trump administration also agreed to provide refunds to borrowers who made additional payments beyond their date of eligibility for cancellation through income driven repayments.Additionally, the government will process buyback applications for IDR and PSLF, including for borrowers who no longer meet the partial financial hardship requirement, which was eliminated under Trump’s Big Beautiful Bill Act.ALSO READ: Beat diabetes naturally: Four superfoods scientifically proven that can keep your blood sugar in check How to check if you’re enrolled in an eligible plan?For federal student loans, borrowers can log in to their account at StudentAid.gov and select “My Aid” or “View Details” to see a detailed breakdown of their loans. This section shows each loan and its repayment plan, allowing borrowers to verify whether they’re enrolled in a plan that qualifies for loan forgiveness.Will borrowers be taxed on cancelled debt?Under the agreement announced Friday, borrowers who become eligible for student loan forgiveness this year will not owe federal taxes on the forgiven amount, the Trump administration confirmed.ALSO READ: AWS outage: Amazon says systems are back online after global internet disruption, releases 'potential reason' The agreement also addresses potential tax penalties for borrowers whose debt is forgiven next year due to administrative delays. Under current tax law, loans discharged in 2026 or later would be considered taxable income, potentially creating a significant financial burden. With the new agreement, the Department of Education will recognize the original date a borrower qualifies for cancellation under an IDR plan, rather than the date the government processes the forgiveness.When will the student loan forgiveness go into effect?The joint agreement is still awaiting court approval to become legally binding. If the court signs off, the administration will be required to file six monthly reports on the status of its IDR and PSLF application and loan cancellation processing. If approved, the agreement could bring relief to borrowers across the country who have been stuck in student loan payment programs for decades.Add as a Reliable and Trusted News Source Add Now! 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