Student loan borrowers enrolled in the Income Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans can once again access debt forgiveness under a Trump administration initiative. The US Department of Education has agreed to restart debt cancellation for eligible individuals, a decision made following an agreement with the American Federation of Teachers (AFT). This reversal offers a crucial opportunity for millions who were previously unable to receive relief after cancellations were halted earlier this year due to a court order. Borrowers should be prepared to act quickly to qualify.
Who Qualifies for This Resumed Forgiveness?
The reinstated forgiveness specifically targets borrowers within the ICR and PAYE plans. The ICR plan limits monthly payments based on a borrower’s discretionary income and leads to forgiveness after 25 years. Similarly, the PAYE plan sets monthly payments and offers loan forgiveness after 20 years. It’s important to note that the Income-Based Repayment (IBR) plan remains available, but only for loans taken out before July 1, 2026.
Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program, advises that borrowers who might have considered transferring to IBR for forgiveness can now remain in their current ICR and PAYE plans and still achieve debt relief without switching.
Impending Phase-Out of ICR and PAYE
The Trump administration has announced that both the ICR and PAYE programs will be phased out starting July 1, 2028. To ensure eligibility for loan forgiveness under these existing plans, borrowers must diligently maintain detailed records of all their payments. Mark Kantrowitz, a higher education expert, points out that approximately 2.5 million borrowers are currently enrolled in ICR or PAYE. He emphasizes that while the agreement with the AFT could help more borrowers qualify for cancellation, the window for action is limited.
How to Secure Forgiveness Promptly
For borrowers who previously submitted a request to switch to an IBR plan but now wish to reverse it, they can contact the Federal Student Aid Information Center at 1-800-4-FED-AID or reach out to their specific student loan servicer. Payments made under PAYE and ICR will continue to count towards loan forgiveness eligibility, even if a borrower decides to switch plans later.
After the phase-out in 2028, borrowers who have not yet qualified for cancellation will need to transition to a new income-driven repayment plan, either the Repayment Assistance Plan (RAP) or a revised Standard Plan. The Education Department reiterates that continued access to IBR is restricted to loans disbursed before July 1, 2026. This revived Trump plan offers a critical, albeit time-sensitive, chance for millions of US student loan borrowers to achieve significant debt relief while the ICR and PAYE programs are still in effect.