The Trump administration has agreed to a court-supervised plan aimed at accelerating debt cancellation for borrowers in income-driven repayment programs.
This agreement, reached with the American Federation of Teachers (AFT) on Friday, resolves ongoing litigation in the AFT v. U.S. Department of Education case. The deal resolves months of legal disputes over the government’s obligation to forgive student loans after decades of payments, as mandated by federal law. Pending court approval, the plan mandates the Education Department to expedite debt relief for eligible borrowers throughout 2025. Importantly, it safeguards borrowers from unforeseen tax liabilities stemming from administrative delays in processing forgiveness.
The AFT highlighted in its statement that this resolution ensures timely debt cancellation without bureaucratic hurdles. Under the terms, the administration must forgive debts for participants in income-driven repayment, income-contingent repayment, Pay As You Earn, and Public Service Loan Forgiveness (PSLF) programs. The Education Department is required to handle IDR and PSLF “buyback” applications efficiently. This includes applications from borrowers who no longer need to demonstrate financial hardship. Overall, the agreement represents a step toward fulfilling legal obligations and providing relief to long-term student loan borrowers.
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NEWS ALERT: Borrowers win big as Trump admin agrees to student debt relief plan
