The U.S. Department of Education has resumed forgiving student debt for eligible borrowers under the Income-Based Repayment (IBR) plan, reversing a partial pause initiated in July due to court actions related to the SAVE plan. This action allows individuals who have been in repayment for decades to receive debt cancellation after 20-25 years, a critical development as IBR is one of the few remaining income-driven repayment options leading to loan erasure. However, this resumption does not resolve broader litigation or address the substantial backlog of other forgiveness programs, such as Public Service Loan Forgiveness.
The Trump administration has resumed forgiving student debt for some borrowers enrolled in a program that’s been partially paused since July. Now, borrowers who’ve been in repayment for decades and are eligible for debt cancellation under the Income-Based Repayment plan, or IBR, are getting notices that they will soon receive the relief. The U.S. Department of Education did not respond to a request for comment on the loan forgiveness actions. A CNBC reporter’s email to a spokesperson at the agency was met with an automated message, saying, “I will respond to emails once government functions resume.” But Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for the federal student loan servicers, confirmed to CNBC that IBR discharges have resumed. Consumer advocates also tell CNBC they have heard from borrowers on IBR who received notices of forgiveness. Persis Yu, deputy executive director and managing counsel at Protect Borrowers, and Betsy Mayotte, president of The Institute of Student Loan Advisors, both said they know of borrowers who’ve been approved for the relief. Loan forgiveness paused since July Over the summer, the U.S. Department of Education announced that it would temporarily stop forgiving the debt of borrowers enrolled in IBR. According to the plan’s terms, IBR concludes in debt erasure after 20 years or 25 years of payments, depending on the age of a borrower’s loans. IBR will be one of only a few repayment options left to many federal student loan holders after recent court actions and the passage by Congress of President Donald Trump’s “big, beautiful bill.” That legislation phases out several existing student loan repayment plans. The pause put many student loan borrowers who’ve been in repayment for decades and were eligible for forgiveness in an especially frustrating bind, said higher education expert Mark Kantrowitz. That’s because IBR is the only income-driven repayment plan still available that leads to loan erasure, Kantrowitz said. More from Personal Finance: As some colleges near $100,000, these schools are free These college majors have the best job prospects Student loan forgiveness may soon be taxed again The Education Department told CNBC in July that it had paused loan forgiveness under IBR while it responds to recent court actions involving the Biden administration-era SAVE, or Saving on a Valuable Education, plan. The department said that the 8th U.S. Circuit Court of Appeals decision in February, which blocked the SAVE plan, had other impacts on student loan repayment. Under the rule involving SAVE, certain periods during which borrowers postponed their payments would count toward their forgiveness timeline. With SAVE blocked now, borrowers no longer get credit during those forbearances. The department said it had paused the relief while it assessed the correct payment counts for borrowers, and that anyone who made payments after becoming eligible for forgiveness would get a refund when the discharges continued. IBR relief central in recent lawsuit The paused IBR loan forgiveness became a central issue in the American Federation of Teacher’s legal battle with the Education Department, Yu said. The teacher’s union, which represents some 2 million members, filed its lawsuit against the Trump administration in March, accusing it of depriving student loan borrowers of their rights. Protect Borrowers is serving as AFT’s legal counsel. Still, the department’s recent actions do not resolve the AFT litigation, Yu said. She said many other borrowers are still waiting for debt cancellation, including tens of thousands of people who believe they’re eligible for Public Service Loan Forgiveness. PSLF offers debt cancellation to those who’ve spent a decade working for certain not-for-profits or the government. As of Aug. 31, there’s a 74,510-person backlog of borrowers waiting for their PSLF determination. Some of the borrowers CNBC has spoken with had submitted their requests for loan forgiveness over half a year ago or more. The Trump administration has resumed student debt forgiveness under the Income-Based Repayment (IBR) plan, reversing a temporary pause initiated in July. This pause was a direct consequence of court actions blocking the separate SAVE plan, which complicated the Department of Education's ability to calculate correct payment counts for borrowers. The resumption is significant as IBR is one of the few remaining income-driven repayment options that provides for debt erasure after 20-25 years of payments, a critical relief valve for borrowers in long-term repayment. While consumer advocates and the Student Loan Servicing Alliance have confirmed the restart of discharges, this action does not fully resolve underlying legal and administrative challenges. The American Federation of Teachers' lawsuit against the administration remains active, and a substantial backlog persists in other forgiveness programs, exemplified by the 74,510-person queue for Public Service Loan Forgiveness (PSLF) determinations as of August 31. The situation highlights the continued regulatory and legal volatility in the student loan sector, where policy execution is subject to abrupt shifts from administrative and judicial decisions.
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