The Trump administration says it will cancel student debt for millions of borrowers under a new agreement with the American Federation of Teachers.
The move marks a reversal from earlier efforts to block some loan forgiveness programs, the New York Post reported Monday.
Under the deal, the White House will restart processing student loan forgiveness for borrowers enrolled in two income-driven repayment programs — Income-Contingent Repayment and Pay As You Earn — until they expire.
Those plans will be phased out by July 1, 2028, under President Donald Trump’s “Big, Beautiful Bill.”
A higher education expert estimated that the two programs together have more than 2.5 million enrollees.
“This is a tremendous win for borrowers. With today’s filing, borrowers can rest a little easier,” said Winston Berkman-Breen, legal director for Protect Borrowers, which represented the teachers’ union.
The administration said borrowers who qualify for loan forgiveness this year will not owe federal taxes on the relief.
The Education Department, led by Secretary Linda McMahon, did not immediately respond to a request for comment.
Earlier this month, the Education Department reinstated a long-standing student loan forgiveness program that had been on hold since July.
Borrowers who have made payments for 25 years under the Income-Based Repayment plan, or IBR, can now have their remaining balances forgiven, according to companies that collect payments on behalf of the government.
Roughly 2 million borrowers are enrolled in IBR, though many have not yet made enough payments to qualify.
Established in 2007, IBR is one of four federal plans that base monthly payments on a borrower’s income and family size.
The plan offers forgiveness after 20 or 25 years — the equivalent of roughly 240 to 300 monthly installments.
According to correspondence obtained by the outlet, the department said borrowers have until Oct. 21 to take advantage of the reinstated program.
The agreement with the teachers’ union follows a lawsuit filed in March by the American Federation of Teachers, which represents about 1.8 million members.
The union accused Trump officials of blocking federal student loan holders from accessing programs that were active when they first borrowed.
Earlier this year, the White House paused forgiveness under some income-driven plans, citing a court order halting the Biden-era Saving on a Valuable Education, or SAVE, program.
The pause left the Income-Based Repayment plan as the only route to eventual loan cancellation.
Consumer advocates had warned that limiting repayment options — including ending SAVE — could sharply increase monthly payments for typical borrowers.
The Student Borrower Protection Center said those increases could amount to hundreds of dollars a month.
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