Trump administration will forgive student loans only for these borrowers: Here’s what you should know
Student loan borrowers enrolled in the Income Contingent Repayment plan (ICR) and the Pay as You Earn plan (PAYE) will once again have access to debt forgiveness under a Trump administration plan. The US Department of Education has agreed to resume cancelling the debt of eligible borrowers, following an agreement with the American Federation of Teachers (AFT), as quoted by the CNBC.Earlier this year, the department had halted loan cancellations under these two plans due to a court order. Millions of borrowers who were previously blocked from relief now have the opportunity to regain access, though they may need to act quickly to qualify.Who is eligible under the resumed planThe resumed forgiveness applies specifically to borrowers enrolled in ICR and PAYE. ICR caps payments at a share of a borrower’s discretionary income and offers forgiveness after 25 years. PAYE similarly limits monthly payments and forgives loans after 20 years. The Income-Based Repayment plan (IBR) continues to be available, but only for loans taken out before July 1, 2026.Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program, told the CNBC that borrowers who had started transferring to IBR to secure forgiveness “can remain in ICR and PAYE and realise forgiveness” without changing plans.Trump plan set to phase out ICR and PAYEThe Trump administration has announced that ICR and PAYE will be phased out from July 1, 2028. Borrowers should maintain detailed records of payments, as these will count toward eligibility for loan forgiveness under the current plans.Mark Kantrowitz, a higher education expert, told the CNBC that around 2.5 million borrowers are currently enrolled in ICR or PAYE. He added that the agreement with the AFT may allow more borrowers to qualify for cancellation, but noted that the window is limited.How to secure forgiveness and act fastBorrowers who wish to cancel a submitted request to switch into IBR can call the Federal Student Aid Information Center at 1-800-4-FED-AID or contact their student loan servicer, as reported by the CNBC. Payments made under PAYE and ICR will continue to count toward eligibility for loan forgiveness, even if borrowers switch plans later.After the phase-out, those not yet eligible for cancellation will need to move to a new income-driven repayment plan called the Repayment Assistance Plan (RAP) or a revised Standard Plan. The Education Department emphasised that continued access to IBR is limited to loans taken out before July 1, 2026, as quoted by the CNBC.The resumed Trump plan provides a critical opportunity for millions of US student loan borrowers to secure debt relief while ICR and PAYE remain in effect.
