The U.S. Department of Education will resume student debt forgiveness for borrowers enrolled in Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans, allowing continued forgiveness until these programs are phased out in 2028 under the One Big Beautiful Bill Act. The decision stemmed from a federal agreement reached between the Trump administration and the American Federation of Teachers (AFT), after the union sued the federal government earlier this year for pausing the federal loan forgiveness programs. The agreement also clarified that borrowers earning forgiveness on or before Dec. 31, 2025, will not owe federal taxes on the canceled debt. The agreement also benefits those in the Public Service Loan Forgiveness Program by allowing past forbearance periods to count toward cancellation.
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