Trump administration sends student loan forgiveness notices
People march in front of the U.S. Department of Education amid reports that U.S. President Donald Trump’s administration will take steps to cut funding for the federal Department of Education on February 4, 2025 in Washington, United States.
Kevin Lamarque | Reuters
Despite the government shutdown, the U.S. Department of Education is sending notices to student loan borrowers that their debts will soon be canceled.
“Because you have reached the required number of payments under the Income-Based Repayment (IBR) Plan, you now have the right to have some or all of your federal student loan canceled,” an email sent to the borrower reads. CNBC reviewed numerous notices sent to borrowers.
The recipient’s loan payment will be processed “within the next few months,” according to the department’s email, and borrowers have until Oct. 21 to opt out of assistance.
In July, the Ministry of Education announced that it would temporarily stop forgiving debts of borrowers registered in the system. IBR plan. Under its terms, IBR results in debt cancellation after 20 or 25 years of payments, depending on the age of the borrower’s loan.
The development caused panic among debtors. After recent court rulings and Congress’ passage of President Donald Trump’s “big beautiful bill” that phases out many existing student loan repayment plans, IBR is currently the only plan offering debt forgiveness.
The department said the aid should be paused while it responds to court decisions that change which periods count for loan forgiveness.
With the relief of the pause, many borrowers who had been in repayment for decades were forced to carry a debt they no longer should have owed under the terms of the loan.
Delinquent IBR loan forgiveness has become a central issue in the American Federation of Teachers’ legal battle with the Department of Education. The teachers union, which represents nearly 2 million members, filed a lawsuit against the Trump administration in March, accusing it of depriving student loan borrowers of their rights.
The union pointed out that borrowers could face a large tax bill if the IBR loan discharge occurs after December.
American Rescue Plan Act of 2021 student loan forgiveness Federally tax-exempt until the end of 2025. Trump’s “big beautiful bill” did not expand or make permanent this broader provision.
