Education Dept restarts student loan forgiveness for 2.5M with AFT

The Trump administration has agreed to resume processing student loan forgiveness for an estimated 2.5 million borrowers enrolled in certain federal repayment plans, officials said Friday, under a settlement with the American Federation of Teachers following the union's lawsuit. The Education Department will restart cancellation for borrowers in income-driven repayment programs and continue work on applications for Public Service Loan Forgiveness, the agreement requires.

Under the deal, the government must cancel outstanding balances for borrowers who qualify under income-driven repayment plans, income-contingent repayment, Pay As You Earn, and the Public Service Loan Forgiveness program. The Education Department also must keep processing applications that use the department's 2023 "buyback" option, which allows some borrowers to count previously missed or paused payments toward forgiveness. The agreement stipulates that any payments made beyond what was required for forgiveness must be refunded to successful applicants.

The settlement also protects borrowers from immediate tax consequences: balances forgiven before Dec. 31 will not be treated as taxable income, the parties...