- The Department of Education has resumed student loan forgiveness for borrowers on the Income Contingent Repayment (ICR) and Pay as You Earn (PAYE) plans.
- The decision follows a legal agreement between the American Federation of Teachers and the Trump administration, reversing a controversial halt to the programs.
- Borrowers face a critical deadline, as both the ICR and PAYE plans are scheduled to be permanently phased out on July 1, 2028.
- An estimated 2.5 million borrowers enrolled in these plans must understand their options to secure the relief they are owed before it’s too late.
A Critical Reprieve for Millions of Borrowers
In a significant reversal, the U.S. Department of Education has resumed canceling student debt for eligible borrowers enrolled in the Income Contingent Repayment (ICR) and Pay as You Earn (PAYE) plans. This move comes after a legal settlement was reached between the American Federation of Teachers (AFT) and the Trump administration, offering a renewed path to relief for millions who were left in limbo.
Earlier this year, the Education Department abruptly stopped forgiving loans under these two long-standing programs, sparking confusion and outrage. The administration cited a court order blocking the newer SAVE plan as the reason, an interpretation that consumer advocates and the AFT heavily disputed.
Why Was Forgiveness Halted?
The AFT, a union representing 1.8 million members, filed a lawsuit in March accusing officials of illegally blocking borrowers from relief programs mandated in their original loan agreements. They argued that the court ruling against the SAVE plan had no legal bearing on the decade-old ICR and PAYE plans. The recent agreement validates this position, forcing the department to honor its commitments.
With over 40 million Americans holding a collective $1.6 trillion in student debt, access to these forgiveness programs is more critical than ever.
The Clock is Ticking: A Limited Window of Opportunity
While this news is a victory for borrowers, it comes with a serious warning: time is running out. President Donald Trump’s new legislation is set to phase out both ICR and PAYE plans permanently as of July 1, 2028. The Education Department has only agreed to provide forgiveness while these plans officially remain in effect, creating a shrinking window for borrowers to receive their promised debt cancellation.
What Borrowers Need to Do Now
Previously, borrowers nearing forgiveness under ICR or PAYE were advised they would need to switch to the Income-Based Repayment (IBR) plan to have their loans discharged. According to Nancy Nierman of the Education Debt Consumer Assistance Program, that is no longer necessary.
“They can remain in these plans and realize forgiveness,” Nierman stated. Borrowers who already submitted a request to switch to IBR can attempt to cancel it by calling the Federal Student Aid Information Center at 1-800-4-FED-AID or contacting their loan servicer directly.
It is crucial for all borrowers to keep meticulous records of their payments to ensure every qualifying month is counted toward their forgiveness timeline.
The Future of Repayment Plans
Once ICR and PAYE are gone, borrowers who haven’t yet qualified for forgiveness will need to switch to a new plan. The good news is that payments made under the old plans will still count toward their relief timeline.
However, another deadline looms. Continued access to the IBR plan will only be available to those who borrow before July 1, 2026. After that date, new borrowers will only be able to enroll in a new income-driven plan called the “Repayment Assistance Plan” (RAP) or a revised Standard Plan.