Copyright Benzinga
The Trump administration has agreed to resume student loan forgiveness for more than 2.5 million borrowers — a move that could inject billions of dollars back into the consumer economy just as the holiday season kicks off. • NAVI is showing upward movement. Get the complete picture here. The decision comes as part of a court settlement between Education Secretary Linda McMahon and the American Federation of Teachers, following a legal standoff over the administration's earlier freeze on key income-driven repayment plans. The agreement reactivates both the Income-Contingent Repayment and Pay As You Earn programs, allowing them to continue operating until July 1, 2028. Borrowers will not face tax bills on forgiven balances through 2025, averting a looming risk from changes in federal tax law that would have classified canceled loans as taxable income starting in 2026. $500 A Month — Now Back In Borrowers’ Pockets Winston Berkman-Breen, legal director of Protect Borrowers, said the agreement ensures Congress's original promise of affordable payments and debt relief will finally be upheld. He described the outcome as a “tremendous win” for millions of Americans who have waited years for the cancellation to take effect. The average federal student loan payment now stands at $536 per month, according to EducationData.org. Eliminating that obligation represents a substantial shift in household finances, particularly for younger workers who often dedicate a big portion of their income to student debt repayment. With 2.5 million borrowers now eligible for relief, the move could free up roughly $16 billion a year in aggregate consumer spending power. That timing, ahead of the year-end shopping period, could serve as an unexpected boost for retail sales and discretionary sectors. The Department of Education, under court supervision, must now resume processing forgiveness applications and reimburse borrowers who continued making payments after they qualified. Progress reports will be filed monthly to ensure that relief moves forward without delay. Stocks To Watch For many borrowers, the financial breathing room arrives just in time for the holidays. Some of that freed-up cash may potentially flow directly into consumer goods, travel and entertainment. Retailers such as Amazon.com Inc. (NASDAQ:AMZN), Target Corp. (NYSE:TGT), and Walmart Inc. (NYSE:WMT) may benefit if young shoppers loosen their budgets heading into the final quarter of the year. While the forgiveness plan could lift retail demand, it may alter business dynamics for companies operating in student loan lending and servicing. Platforms such as SoFi Technologies Inc. (NASDAQ:SOFI), Nelnet Inc., (NYSE:NNI) and Navient Corp. (NASDAQ:NAVI) could experience changes in refinancing demand as more borrowers exit repayment. Read Now: Regional Bank Scare Was A Fluke, Zions Says—But Is The Sector Really Safe? Photo: Vitalii Vodolazskyi via Shutterstock
