The Trump administration will restart student loan forgiveness for millions of borrowers following a settlement with the American Federation of Teachers (AFT).
The decision reverses earlier actions that limited access to loan relief and restores two major income-driven repayment programs: Income-Contingent Repayment and Pay As You Earn.
These programs let borrowers make payments based on their income and cancel the remaining balance after 20 or 25 years. More than 2.5 million people are currently enrolled. Both programs will continue until July 1, 2028, when they are scheduled to be phased out under Trump’s “Big, Beautiful Bill.”
The AFT sued the Trump administration in March, accusing officials of blocking access to programs that were active when many borrowers first took out their loans. The organization represents about 1.8 million members, many of them public service workers who rely on these repayment options.
Winston Berkman-Breen, legal director for Protect Borrowers and counsel for the AFT, celebrated the outcome.
“This is a tremendous win for borrowers. With today’s filing, borrowers can rest a little easier,” he said. “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.”
Borrowers who receive forgiveness this year will not owe federal taxes on the canceled debt, according to the administration.
A spokesperson for the Department of Education said earlier system delays were caused by legal challenges connected to the Biden administration’s broader loan forgiveness plan.
“The Biden Administration’s illegal attempts at mass student loan forgiveness impacted all of the Department’s income-driven repayment programs, including Income-Based Repayment,” the spokesperson told The Post. “The courts intervened to stop their illegal efforts, but that also impacted Department systems and prevented us from processing lawful loan discharges. Thanks to the Trump Administration’s efforts to separate out the illegal loan cancellation schemes, we are able to process legitimate loan cancellations once again.”
The new agreement ensures that millions of borrowers can once again move forward toward debt relief. For many public service employees and teachers, this settlement provides long-awaited clarity and restores the financial support they were promised.
