The Trump administration has agreed to cancel student debt for millions of borrowers, according to reports. The White House reopened a path to student loan forgiveness through an agreement with the American Federation of Teachers (AFT), allowing eligible borrowers to access relief under two income-driven repayment plans—Income-Contingent Repayment and Pay as You Earn—until their expiration in 2028. These programs, which have over 2.5 million participants, were previously paused by the administration.
The agreement comes after the AFT sued Trump officials, alleging they blocked federal student loan holders from accessing “programs mandated in their original borrowing terms.” The administration had cited a court order halting the Saving on a Valuable Education (SAVE) plan—a Biden-era program—as justification for pausing certain repayment plans. However, consumer advocates argued this interpretation was overly broad, leaving borrowers with limited options.
Under the new arrangement, borrowers who qualify for forgiveness this year will not owe federal taxes on the relief. The AFT’s legal director, Winston Berkman-Breen, called the move a “tremendous win for borrowers,” stating the Department of Education would now adhere to Congressionally mandated affordability measures. The agreement also includes court supervision to ensure compliance.
