White House to cancel Student debt for millions of borrowers under income-driven repayment plans
White House to cancel Student debt for millions of borrowers under income-driven repayment plans
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White House to cancel Student debt for millions of borrowers under income-driven repayment plans

Ctionswhite House 🕒︎ 2025-10-21

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White House to cancel Student debt for millions of borrowers under income-driven repayment plans

AP Trump administration has agreed to resume and accelerate student loan forgiveness (Representative Image) In a major policy turnaround, the Trump administration has agreed to resume and accelerate student loan forgiveness for millions of eligible borrowers enrolled in income-driven repayment (IDR) programs, following a legal settlement with the American Federation of Teachers (AFT). This agreement marks a significant victory for borrowers caught in limbo due to prior administrative halts and ongoing court battles.The accord, announced in October 2025, requires the Department of Education to restart processing loan cancellations under major IDR plans, including Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE). Currently, over 2.5 million borrowers participate in these plans, which forgive remaining student debt once qualifying payments are made for 20 to 25 years, depending on the program specifics and loan origination date.This resolution follows a lawsuit filed by AFT in March 2025 against the Education Department, accusing it of blocking borrower access to forgiveness programs that were available when loans were first taken—thus infringing on borrower rights. The suit contended that the administration’s suspension of forgiveness under various income-driven plans was unlawful.Live EventsA critical component of the deal ensures that borrowers who qualify for forgiveness this year will not owe federal taxes on the canceled debt—a protection against what experts term a potential "tax bomb." Without this measure, forgiven debt processed after 2025 would be considered taxable income under a new federal law effective 2026, potentially imposing substantial financial burdens on borrowers.Winston Berkman-Breen, legal director for Protect Borrowers, which represented the AFT in the lawsuit, hailed the agreement as a "tremendous win for borrowers" that brings relief and reassurance to borrowers. AFT President Randi Weingarten emphasized the union's decade-long advocacy for debt relief and welcomed "immediate relief" for borrowers previously stuck in procedural limbo.The administration agreed to refund borrowers who made extra qualifying payments prior to eligibility for cancellation, reinstate loan discharge processing, and provide monthly progress reports to the court on forgiveness implementation.Notably, the Trump administration had paused some forgiveness programs earlier in the year pending court rulings related to the Biden-era Saving on a Valuable Education (SAVE) plan, but the new settlement signals a commitment to uphold borrower rights and ensure compliance with federal laws.The income-driven repayment programs targeted for cancellation are scheduled for phase-out by July 2028 under the Trump administration's "Big, Beautiful Bill" legislative framework, underscoring this interim relief as crucial for millions of borrowers currently burdened by student debt.Borrowers can verify their eligibility and enrollment by accessing their federal loan accounts through official portals, with federal agencies urging qualified individuals to stay informed about the forgiveness process as it resumes.Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News onstudent loan forgivenesstrump student loan debt reliefAmerican Federation of TeachersPay As You EarnEducation DepartmentSaving on a Valuable Education (Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) Download The Economic Times News App to get Daily International News Updates....moreless (You can now subscribe to our Economic Times WhatsApp channel)Read More News onstudent loan forgivenesstrump student loan debt reliefAmerican Federation of TeachersPay As You EarnEducation DepartmentSaving on a Valuable Education(Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) Download The Economic Times News App to get Daily International News Updates....moreless

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