Because of a new deal between the U.S. Treasury‑related administration and the American Federation of Teachers (AFT), millions of people still struggling with federal student loans can finally breathe a little easier. The ruling will roll back a pause that the previous administration had placed on several income‑driven repayment plans, letting borrowers who have been making their regular payments qualify for loan forgiveness.
How the deal works
- Eligible plans: If you are on an income‑based repayment plan (IBR), an income‑contingent repayment plan, a pay‑as‑you‑earn plan, or the Public Service Loan Forgiveness (PSLF) program, your loan is covered.
- What you need to do: You must have made the minimum required payments for the length of your plan before the loan can be forgiven.
- Extra payments: Those who paid a little more than the minimum before their loan became eligible will get a refund for those extra amount.
No tax surprise
Normally, when a loan is forgiven it is considered taxable income. This deal says that if you’re set to have your debt canceled this year, you won’t owe any federal tax on it—regardless of any delays in the paperwork. The government will use the date you actually qualify for forgiveness, not the date it processes the cancellation. That keeps borrowers from paying a tax bill later on for 2026‑era changes that would treat forgiven debt as income.
Check if you qualify
- Log in to your student loan account at StudentAid.gov.
- Click “My Aid” or “View Details” to see every loan and its repayment plan.
- Look for any of the four eligible plans listed above.
When will it take effect?
The agreement is waiting for a court to make it officially binding, after which the Department of Education will need to file six monthly reports on how many loans have been canceled and how many IDR and PSLF applications are processed. The exact timing is still unconfirmed, but once approved, the relief should start rolling out across the country promptly.
Who said it matters
- AFT President Randi Weingarten: “After nearly a decade of fighting, we finally won a big win for borrowers. Those who have been stuck can now see a real end to the debt drag.”
- Protect Borrowers’ legal director Winston Berkman‑Breen: “Today’s filing means borrowers can rest a little easier.”
This move restores a major debt‑relief tool that had been frozen mid‑stream, providing hope for millions of borrowers who have been paying through slim margins. If you’re on a qualifying plan, check your account today and see if you’re eligible for the forgiveness offered by the new agreement.
Source: New York Post
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