The Trump administration has agreed to continue some forms of student loan forgiveness and payment plans in a court settlement reached with one of the largest teacher unions in the country.
The agreement filed by the Department of Education (ED) and the American Federation of Teachers (AFT) states the federal government has agreed to continue processing student loan forgiveness under the Income-Based Repayment (IBR), Original Income Contingent Repayment (ICR), Pay As You Earn (PAYE), and Public Service Loan Forgiveness (PSLF) Buyback programs.
ED is only required to process ICR and PAYE applications for as long as the programs are active. These programs are scheduled to come to a close on July 1, 2028, thanks to the “One Big Beautiful Bill.”
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“For nearly a decade, the AFT has fought for the rights of student loan borrowers to be freed from the shackles of unjust debt — and today, a huge part of that affordability fight was vindicated,” AFT President Randi Weingarten said in a statement. “This year, we took on the Trump administration when it refused to follow the law and denied borrowers the relief they were owed. Our agreement means that those borrowers stuck in limbo can either get immediate relief or finally see a light at the end of the tunnel.”
AFT sued the education department in March claiming the administration was “effectively breaking the student loan system” and violating federal law. ED had placed a pause on all student loan repayment program applications after a court sided with the federal government to halt the Biden-era SAVE plan, a ruling the department argued could be applied to other loan programs.
The Biden administration used programs such as PSLF to forgive billions in student loans for government workers alone. Nearly $200 billion for over five million borrowers was forgiven during the four-year term, and the administration had plans to target millions more.
During this time, the federal government also failed to enforce student loan payments, allowing millions of borrowers to fall into delinquency by continuously extending a COVID-era pause on involuntary collection methods.
“The AFT will hold the federal government to its word, and we won’t stop fighting until college is affordable and taking out a student loan doesn’t trap millions of Americans in a ruinous and exploitative debt cycle,” Weingarten continued.
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The Department of Education told the DCNF in a statement that the administration’s prior legal setbacks affected repayment systems across programs.
“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 DCNF. “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 for borrowers who have been making payments for the requisite number of years. The Administration looks forward to continuing its work to simplify the student loan repayment process through implementation of the President’s One Big Beautiful Bill Act.”
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