Nationwide — President Trump, in partnership with Education Secretary Linda McMahon, has approved a deal to cancel student debt for millions of Americans after months of legal disputes over loan forgiveness programs. The agreement restores two repayment plans and protects borrowers from paying extra taxes on canceled debt.
According to the New York Post, the White House reached an agreement with the American Federation of Teachers (AFT) to resume processing student loan forgiveness under two income-driven repayment plans: Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE). Both programs will continue operating until they officially end in 2028.
More than 2.5 million borrowers are enrolled in the two plans, according to education experts. These programs base monthly payments on a borrower’s income and cancel any remaining debt after 20 or 25 years of payments.
Winston Berkman-Breen, legal director for Protect Borrowers, praised the decision, calling it “a tremendous win for borrowers.” He said the Department of Education has now 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.”
The Trump administration confirmed that borrowers who receive forgiveness this year will not owe federal taxes on the canceled amount.
The AFT, which represents about 1.8 million members, sued earlier this year, claiming that Trump officials had blocked borrowers from accessing forgiveness programs that existed when their loans were first issued.
Earlier in the year, the Education Department paused some income-driven repayment options, leaving borrowers with only one active option for debt cancellation, which is the Income-Based Repayment (IBR) plan. Education Secretary Linda McMahon argued that the pause was tied to a court order concerning the Biden-era SAVE program.
Consumer advocates warned that reducing repayment choices could cause borrowers’ monthly payments to rise by hundreds of dollars. The new settlement reverses those limits, offering long-awaited relief to millions of Americans burdened by student debt.
Source: BlackNews.com
