 "Trump admin relents, to resume student loan forgiveness for millions")
In a shift from its earlier stance, the Trump administration has agreed to cancel student debt for millions of borrowers in the United States, according to the American Federation of Teachers (AFT), a major teachers’ union with about 1.8 million members.
The White House reached an agreement with the AFT last week to restart student loan forgiveness for eligible borrowers under two repayment plans — ‘Income-contingent repayment' and 'Pay as you earn'. This will continue until the programmes end.
Under Trump’s “Big, Beautiful Bill”, these two programmes will be phased out by July 1, 2028. The two plans together currently have more than 2.5 million people enrolled, according to reports.
AFT lawsuit prompts reversal
In March, the AFT filed a lawsuit against the Trump administration, claiming that officials were unfairly preventing federal student loan borrowers from using certain repayment and forgiveness programmes that were available when they first took out their loans.
In a statement on Friday, AFT President Randi Weingarten said, “This year, we took on the Trump administration when it refused to follow the law and denied borrowers the relief they were owed. Our agreement means that those borrowers stuck in limbo can either get immediate relief or finally see a light at the end of the tunnel. And, crucially, they won’t ever get taxed on that relief.”
Borrowers who become eligible for student loan forgiveness this year will not owe federal taxes on the relief. “The AFT will hold the federal government to its word, and we won’t stop fighting until college is affordable and taking out a student loan doesn’t trap millions of Americans in a ruinous and exploitative debt cycle,” Weingarten added.
How income-driven repayment works
Earlier this year, the White House had temporarily stopped processing loan forgiveness under some of these income-driven repayment (IDR) plans.
These IDR programmes are designed to make student loan payments more manageable by setting a borrower’s monthly payment based on income rather than the total loan amount. After 20 or 25 years of regular payments, any remaining debt is typically forgiven.
In its lawsuit, the AFT argued that blocking access to these programmes hurt teachers and other public workers who had planned their finances based on the promise of eventual loan forgiveness.