October 21, 2025
The Department of Education will resume loan cancellations for the two Income-Driven Repayment (IDR) plans, grant payment refunds to eligible borrowers, and provide regular status updates to maintain transparency and compliance with federal law.
The Trump administration says it will agree to canceling student loan debt for eligible borrowers under certain plans, following a legal agreement with the Department of Education and the American Federation of Teachers (AFT).
This marks a significant pivot for the Trump administration, which previously paused or restricted access to student debt relief through federal income-driven repayment programs. An estimated 2 million to 2.5 million student loan borrowers who met the requirements for having their student loans forgiven were caught in the crossfire in the Trump administration’s policy shift.
The agreement between the Education Department and AFT now allows borrowers to resume their plans for student debt forgiveness and also provides legal clarity.
Who Is Eligible For Student Loan Debt Relief?
According to Newsweek, the Department of Education will resume loan cancellations for the two Income-Driven Repayment (IDR) plans, grant payment refunds to eligible borrowers, and provide regular status updates to maintain transparency and compliance with federal law.
Borrowers who have made 20 to 25 years of consecutive qualifying payments, depending on the loan origination date and plan enrollment, qualify for student loan forgiveness. The agreement also acknowledges borrowers who are eligible for student loan forgiveness in 2025.
As BLACK ENTERPRISE previously reported, a temporary tax rule approved by President Joe Biden will end in December 2025. This means that IDR plans will once again be taxable as the 2021 provision in the American Rescue Plan, which made forgiveness tax-free, is set to expire. For borrowers, this would have resulted in thousands of dollars in tax bills, depending on the amount forgiven.
Eligible student loan borrowers will not be forced to pay the pending tax penalty because of current government processing delays and ongoing litigation under the agreement.
Borrowers who are eligible for relief will begin receiving notifications from the Department of Education in October. The email will outline options for accepting forgiveness or opting out.
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