Exciting news for many student loan borrowers! Those enrolled in the Income Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans can once again qualify for significant debt forgiveness. This development comes after the U.S. Department of Education reinstated loan cancellations, following an agreement with the American Federation of Teachers. This provides a crucial, though limited, opportunity for millions who were previously unable to access relief.
Who Qualifies for This Renewed Forgiveness?
This revived forgiveness program specifically targets borrowers in the ICR and PAYE plans. The Income Contingent Repayment (ICR) plan structures payments based on a percentage of your discretionary income and leads to loan forgiveness after 25 years. Similarly, the Pay As You Earn (PAYE) plan limits monthly payments and offers forgiveness after 20 years. It’s important to note that the Income-Based Repayment (IBR) plan remains available, but only for loans disbursed before July 1, 2026.
For borrowers who had started transitioning to IBR in anticipation of securing forgiveness, experts like Nancy Nierman, Assistant Director of the Education Debt Consumer Assistance Program, confirm that they can choose to stay with their existing ICR and PAYE plans and still achieve forgiveness without needing to switch.
Upcoming Changes: ICR and PAYE to Phase Out
The administration has announced that both ICR and PAYE plans are slated to be phased out, effective July 1, 2028. This makes the current window for forgiveness particularly time-sensitive. Borrowers are strongly advised to meticulously maintain detailed records of all payments made, as these will be critical for verifying eligibility under the existing plans.
Higher education expert Mark Kantrowitz estimates that approximately 2.5 million borrowers are currently enrolled in either ICR or PAYE. While this agreement with the AFT opens the door for more borrowers to qualify for cancellation, the limited timeframe emphasizes the need for swift action.
How to Act Fast and Secure Your Forgiveness
If you had previously requested to switch from ICR or PAYE to IBR and now wish to reverse that decision to pursue forgiveness under your current plan, you can contact the Federal Student Aid Information Center at 1-800-4-FED-AID or reach out directly to your student loan servicer. Remember, all payments made under PAYE and ICR will continue to count towards your loan forgiveness eligibility, even if you decide to change plans later on.
After the 2028 phase-out, borrowers who haven’t yet qualified for cancellation will be directed to new income-driven repayment options, such as the Repayment Assistance Plan (RAP) or a revised Standard Plan. The Education Department reiterates that ongoing access to IBR is strictly for loans originated before July 1, 2026.
This reinstatement presents a vital chance for millions of U.S. student loan borrowers to achieve significant debt relief before the ICR and PAYE programs come to an end.