Trump administration agrees to deliver more student loan forgiveness
U.S. President Donald Trump speaks with Secretary of Education Linda McMahon during the executive order signing ceremony in the Roosevelt Room of the White House on July 31, 2025 in Washington, DC.
Anna Money Maker | Getty Images
The Trump administration has reopened the path to student loan forgiveness for millions of borrowers, in part by agreeing to cancel student debt under programs it blocked.
The result is the result of an agreement The agreement was reached Friday between the U.S. Department of Education and the American Federation of Teachers, a union.
In the agreement, the Trump administration said it would reinstate student loan forgiveness for eligible borrowers within two years. income-driven repayment plans — the original Income Contingent Repayment plan and the Pay As You Earn plan — as long as these programs remain in effect.
President Donald Trump’s “big, beautiful bill” Phase out ICR and PAYE As of July 1, 2028.
“This is a tremendous win for debtors,” said Winston Berkman-Breen, legal director of Protection Debtors, which served as counsel to the AFT. “The U.S. Department of Education has agreed to comply with the law and provide Congressionally mandated affordable payments and debt relief to hard-working public service workers across the country.”
The Department of Education did not immediately respond to a request for comment.
Higher education expert Mark Kantrowitz estimates that more than 2.5 million borrowers are covered by either ICR or PAYE.
Why was student loan amnesty blocked?
The AFT, which represents nearly 1.8 million union members, filed a lawsuit against Trump officials in March, accusing them of blocking federal student loan holders from programs mandated by their original borrowing terms.
Earlier this year, the Trump administration paused student loan forgiveness under some income-driven repayment plans, saying it was doing so in response to court orders. IDR plans set the borrower’s monthly bill at a fraction of his or her discretionary income and cancel the remaining debt after a specified period of time, usually 20 years or 25 years.
The Department of Education under the Trump administration said: A court decision halting the Savings on Valuable Education, or SAVE, plan, a Biden administration-era program, had implications for other IDR plans.
Consumer advocates argued this was too broad an interpretation of the court decision. And it left borrowers with only one repayment plan that led to student loan cancellation: the Income-Based Repayment plan, or IBR. The Trump administration also paused the cancellation of the IBR loan for a period of time, but later resumed processing this aid.
In the agreement with the AFT, the Trump administration also announced that borrowers who qualify for student loan forgiveness in 2025 will not owe federal taxes due to the aid. The law providing federal tax-free treatment for canceled education debt expires at the end of this year.
