Student loan borrowers currently utilizing the Income Contingent Repayment (ICR) plan and the Pay as You Earn (PAYE) plan will once again find a path to debt forgiveness under a plan from the Trump administration. The U.S. Department of Education has confirmed it will resume canceling the debt of eligible borrowers, following a recent agreement with the American Federation of Teachers (AFT). This development comes after the department had previously paused loan cancellations for these programs due to a court order earlier this year. Millions of borrowers who were previously excluded now have a renewed opportunity to access relief, though prompt action may be necessary to qualify.
Student loan forgiveness returns under Trump plan: What ICR and PAYE borrowers need to know. (Getty Images)
Who is eligible under the resumed plan?
This reinstated forgiveness specifically targets borrowers enrolled in ICR and PAYE. The ICR plan caps monthly payments based on a portion of a borrower’s discretionary income and offers forgiveness after 25 years of payments. Similarly, the PAYE plan limits monthly payments and provides loan forgiveness after 20 years. It’s important to note that the Income-Based Repayment (IBR) plan remains available, but only for loans originated before July 1, 2026.
Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program, advises that borrowers who had begun transferring to IBR to secure forgiveness can now opt to remain in their ICR and PAYE plans and still achieve forgiveness without needing to switch.
Trump plan set to phase out ICR and PAYE
The Trump administration has announced that both ICR and PAYE plans will be gradually phased out, starting July 1, 2028. Borrowers are strongly encouraged to maintain meticulous records of all their payments, as these records will be essential for proving eligibility for loan forgiveness under the existing plans.
Mark Kantrowitz, a renowned higher education expert, points out that approximately 2.5 million borrowers are currently enrolled in either ICR or PAYE. He highlights that while the agreement with the AFT could enable more borrowers to qualify for cancellation, the window of opportunity is unfortunately limited.
How to secure forgiveness and act fast
For borrowers who previously submitted a request to switch into the IBR plan but now wish to cancel it, they can contact the Federal Student Aid Information Center at 1-800-4-FED-AID or reach out to their respective student loan servicer. Payments made under PAYE and ICR will continue to count towards loan forgiveness eligibility, even if borrowers decide to change plans later on.
Following the phase-out period, 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 taken out before July 1, 2026.
This resumed Trump plan offers a critical, albeit limited, window of opportunity for millions of U.S. student loan borrowers to secure much-needed debt relief while the ICR and PAYE plans are still in effect. Act quickly to understand and utilize these options.