The Trump administration says it is cancelling student debt for millions of borrowers — a pivot from its previous moves to block some loan forgiveness plans.
In an agreement with the American Federation of Teachers, the White House will again start processing student loan forgiveness for eligible borrowers in two income-driven repayment plans – Income-Contingent Repayment and Pay as You Earn – until they expire.
President Trump’s “Big, Beautiful Bill” is slated to phase out those two programs by July 1, 2028. They have over 2.5 million enrollees total, a higher ed expert estimated.
“This is a tremendous win for borrowers. With today’s filing, borrowers can rest a little easier,” said Winston Berkman-Breen, legal director for Protect Borrowers, which acted as counsel for the teachers’ union.
“The US Department of Education has agreed to follow the law and deliver Congressionally mandated affordable payments and debt relief to hard-working public service workers across the country, and will do so under court supervision. We fully intend to hold them to their word.”
Under Friday’s agreement, borrowers who become eligible for student loan forgiveness this year will not owe federal taxes on the relief, the Trump administration said.
The Department of Education did not immediately respond to The Post’s request for comment.
In a lawsuit filed in March, the AFT – which has about 1.8 million union members – accused Trump officials of blocking federal student loan holders from accessing programs that were in effect when they first borrowed.
Earlier in the year, the White House paused student loan forgiveness under some income-driven repayment plans. These programs calculate a borrower’s monthly payment based on their salary, and typically cancel any remaining debt after 20 or 25 years.
Trump’s Education Department – led by Linda McMahon – argued it could block these programs due to a court order pausing the Biden-era Saving on a Valuable Education plan, or SAVE, another income-driven repayment program.
The temporary blocks left borrowers with just one repayment plan option resulting in loan cancellation, known as the Income-Based Repayment plan, or IBR.
As Trump’s signature tax and spending legislation took shape over the summer, consumer advocates warned about the potential damage to borrowers.
Limited repayment options – including the end of SAVE – could spike monthly student loan payments for a typical borrower by hundreds of dollars, according to an analysis from research nonprofit Student Borrower Protection Center.
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