The Trump administration has restarted student loan forgiveness for borrowers enrolled in the federal Income-Based Repayment (IBR) program, after a months-long pause that left thousands waiting for debt relief. The move marks a significant policy shift following weeks of legal and political pressure from borrower advocates and unions.
Emails sent last week by the U.S. Department of Education informed qualifying borrowers that they are now eligible to have their loans discharged. "You are now eligible to have some or all of your federal student loan(s) discharged because you have reached the necessary number of payments under your Income-Based Repayment (IBR) Plan," the notice said, according to Forbes. "The U.S. Department of Education (ED) will work with your loan servicer to process your IBR discharge over the next several months."
The resumption applies to borrowers who have made payments for 20 or 25 years under IBR terms, depending on when their loans originated. Loan servicers confirmed to multiple outlets that they were notified by the department to resume discharges. Scott Buchanan, executive director of the Student Loan Servicing Alliance, told CNBC that IBR cancellations have officially resumed.
The relief comes after the Education Department halted all IBR discharges in July, citing confusion over a federal court decision that blocked the Biden-era Saving on a Valuable Education (SAVE) plan. The pause angered borrowers, some of whom had been in repayment for decades. "I can't believe this is happening - I'm literally sitting here in tears right now!" one borrower wrote on Reddit after receiving the so-called "Golden Email." "My current loan balance is over $200,000 and it was gonna take 40 years for me to pay this off."
According to Persis Yu, deputy executive director of Protect Borrowers, and Betsy Mayotte, president of The Institute of Student Loan Advisors, their organizations have heard from multiple IBR borrowers who received forgiveness notifications. Yu said the resumed discharges were long overdue.
The American Federation of Teachers (AFT) has been at the forefront of litigation pressing the department to act. The union filed a lawsuit in March accusing the Education Department of unlawfully withholding IBR cancellations. "We stood up to them in court and demanded that they follow the law," AFT President Randi Weingarten said, according to The Washington Post. "Right away, the U.S. Department of Education changed its tune - the clearest sign yet that borrowers' rights can win out over this lawless and reckless ideological scheme."
The Education Department has not commented publicly on the policy reversal. A CNBC inquiry received an automated response from the agency stating, "I will respond to emails once government functions resume," reflecting ongoing disruptions during the partial government shutdown.
The renewed forgiveness program could affect tens of thousands of long-term borrowers. As of late August, there was a backlog of more than 74,000 Public Service Loan Forgiveness (PSLF) cases awaiting determination - separate from IBR - further straining administrative capacity. Under the resumed IBR process, borrowers who made qualifying payments beyond their forgiveness threshold will receive refunds once the discharge is finalized.
Borrowers who prefer not to participate have until October 21 to opt out of cancellation, the department said, citing possible state-level tax implications. Most discharges are expected to be processed within two weeks, though the Education Department cautioned that "for some borrowers, processing could take more time."
