United States President Donald Trump's administration announced a new wave of student loan forgiveness that will cancel debts for millions of borrowers.
The development comes after an agreement with the American Federation of Teachers (AFT), which will have the White House once again starting to process student loan forgiveness for eligible borrowers in two income-driven repayment plans: Income-Contingent Repayment and Pay as You Earn, until the debts expire.
Student Loan Forgiveness
This comes as the Republican president's "Big, Beautiful Bill" is also set to phase out those two programs by July 1, 2028. The latest estimate notes that they have more than 2.5 million enrollees in total.
In a statement, the legal director for Protect Borrowers, Winston Berkman-Breen, said that the announcement is a major win for borrowers. He noted that the latest filing means that borrowers can rest a little bit easier.
Brekman-Breen added that the U.S. Department of Education agreed to follow the law and deliver Congressionally mandated affordable payments and debt relief to hard-working individuals across the nation, according to the New York Post.
Under the latest agreement, borrowers in the U.S. who are eligible for student loan forgiveness this year will no longer owe federal taxes on the relief. The situation comes after a lawsuit was filed in March, where the AFT accused Trump officials of blocking federal student loan holders from accessing programs that were in effect when they first borrowed.
The White House, earlier this year, paused student loan forgiveness under some income-driven repayment plans. These programs calculate a borrower's monthly payment based on their salary, and will typically cancel any remaining debt after 20 or 25 years.
The Department of Education, under the current administration, previously said that a court order that halted the Saving on a Valuable Education (SAVE) plan had implications for other IDR plans, CNBC reported.
Affecting Millions of Borrowers
On the other hand, consumer advocates argued that that was too broad a reading of the court order. Many believe that it left borrowers with only one repayment plan available, which led to student loan cancellation.
AFT President Randi Weingarten said that for nearly a decade, the organization has fought for the rights of student loan borrowers to be freed from the chains of "unjust debt." He said that the latest agreement means that borrowers who are stuck in limbo can finally get much-needed assistance.
Weingarten said that AFT will hold the federal government to its word and that it will not stop fighting until college in the U.S. becomes affordable. They also aim to make taking out a student loan not a trap for millions of Americans that forces them into a downward spiral of debt, as per Fox Business.
