Trump, AFT Settle IDR Forgiveness Through 2028

The Trump administration reached a settlement with the American Federation of Teachers to resume and accelerate student loan cancellations for borrowers in income‑driven repayment plans, including ICR, PAYE, IBR and related Public Service Loan Forgiveness tracks, after litigation and an earlier pause. The deal, affecting roughly 2.5 million borrowers, directs the Education Department to backdate eligibility, resume processing discharges, refund excess payments, process buyback applications and file monthly progress reports under court supervision. Borrowers who become eligible in 2025 will have their discharges protected from federal income tax under the American Rescue Plan Act’s tax‑free window, averting a potential tax liability that could have taken effect in 2026. The administration said the programs will continue to operate through a planned phaseout tied to its broader legislative proposals into 2028, and advocates hailed the settlement as a major win for borrowers kept in limbo. Implementation and oversight remain subject to court approval and the monitoring requirements outlined in the settlement paperwork.