The Trump administration has agreed to forgive student debt under income-driven repayment programs it had partially blocked

The Trump administration has agreed to reinstate student debt relief under programs it previously limited, reopening access to loan forgiveness for millions of borrowers.

The agreement, reached Friday between the U.S. Department of Education and the American Federation of Teachers (AFT), restores processing of student loan forgiveness for eligible borrowers enrolled in two income-driven repayment plans — the Income-Contingent Repayment (ICR) plan and the Pay As You Earn (PAYE) plan — for as long as those programs remain active.

Under President Donald Trump’s “Big Beautiful Bill,” both ICR and PAYE are scheduled to be phased out as of July 1, 2028.

“This is a tremendous win for borrowers,” said Winston Berkman-Breen, legal director for Protect Borrowers, which represented the AFT in the case. “The Department of Education has agreed to follow the law and provide affordable payments and debt relief to public service workers across the country.”

More than 2.5 million borrowers are currently enrolled in ICR or PAYE plans, according to higher education expert Mark Kantrowitz. The AFT had sued earlier this year, alleging that the administration unlawfully blocked debt cancellation programs guaranteed under federal loan terms. The Education Department had previously paused forgiveness in certain income-driven repayment plans, citing court orders related to the Saving on a Valuable Education (SAVE) plan. Consumer advocates argued that the interpretation was overly broad, leaving most borrowers with only one available forgiveness path under the Income-Based Repayment (IBR) plan. Processing for that program has since resumed.