The Trump administration and the American Federation of Teachers (AFT) has finally come to an agreement that will provide debt relief for millions of student loan borrowers. Here are the programs that will see some relief and the timeline for the new policy going into effect.
The New Agreement
The new agreement allows for the Department of Education to process forgiveness for borrowers enrolled in the following programs: Income-Contingent Repayment, Pay As You Earn, and Public Service Loan Forgiveness. Legal director for Protect Borrowers Winston Berkman-Breen explained, “This is a tremendous win for borrowers.”
Tax Break for Borrowers
Borrowers will also see a tax break per the new deal. Those who qualify for forgiveness through eligible payments this year will not owe taxes on canceled debt. This also applies to the forgiveness that will not go into effect until 2026.
Impact for Millions of Borrowers
The relief will impact more than 2.5 million borrowers who are currently enrolled in the aforementioned programs. This brings huge relief to those borrowers who were left without answers during the lawsuit between the AFT and Trump administration in March, 2025.
Relief Will Not Be Instant
Borrowers should not expect instant relief as experts explain the layoffs within the Department of Education will slow the process for forgiveness applications. That being said, payments made while applications are being reviewed will be repaid retroactively upon approval. Borrowers should keep in mind that they should have clear records of their payments to ensure proper repayment.
