Republicans fought former President Joe Biden tooth and nail when he tried to institute student loan forgiveness plans during his administration, but now President Donald Trump has agreed to remove the pause on established programs that have been in place for years or decades.
Income-driven repayment plans cap the monthly loan amount at a percentage of the borrower's income, and usually forgive the loans after 20 or 25 years of consistent payments.
Trump had paused forgiveness under those plans earlier in the year to review them, and Education Secretary Linda McMahon had argued that the court order blocking Biden's Saving on a Valuable Education plan (SAVE) would allow them to stop offering loan forgiveness under the plans.
Despite this argument, Trump decided to restart them as part of an agreement with the American Federation of Teachers, which celebrated the move.
“This is a tremendous win for borrowers. With today’s filing, borrowers can rest a little easier,” legal counsel Winston Berkman-Breen said.
“The US Department of Education has agreed to follow the law and deliver congressionally mandated affordable payments and debt relief to hard-working public service workers across the country, and will do so under court supervision. We fully intend to hold them to their word.”
Under the agreement, borrowers who receive forgiveness will not owe taxes on the amount forgiven.
“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 courts intervened to stop their illegal efforts but that also impacted Department systems and prevented us from processing lawful loan discharges,” a spokesperson for the Department of Education told The Post in a statement.
“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.”
The move is temporary, because Trump's One Big Beautiful Bill will be phasing out the programs by 2028 anyway.
But by agreeing to reverse the pause, Trump will settle the lawsuit by the AFT in March.
It makes sense because the borrowers were told they could access the program when they took the loans, so it doesn't seem fair to change the rules in the middle of the game.
Those paying under income-based repayment plans can end up owing far more than they originally borrowed because of interest over many years, so the forgiveness makes sense at some point.
