White House Okays Fast Debt Relief

The Trump administration has reached a new agreement with the American Federation of Teachers (AFT) that could unlock long-awaited student loan relief for millions of borrowers, Moneywise reported.

The agreement allows the Department of Education to resume loan relief programs that are expected to be phased out under President Trump’s One Big Beautiful Bill. (Photo: GDFL Wikimedia Commons) 

The agreement allows the Department of Education to resume processing forgiveness for borrowers enrolled in Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and the Public Service Loan Forgiveness (PSLF) programs — especially those who have been repaying their loans for more than two decades.

These programs will remain in place until 2028, when they are expected to be phased out under President Trump’s One Big Beautiful Bill.

The deal also includes a tax break: Borrowers who qualify for forgiveness through eligible payments this year will not owe taxes on the canceled debt, even if the forgiveness does not take effect until 2026.

After that, however, forgiven balances will once again be considered taxable income.

“This is a tremendous win for borrowers,” Winston Berkman-Breen, legal director for Protect Borrowers, told CNBC.

“The US Department of Education has agreed to follow the law and deliver congressionally mandated affordable payments and debt relief to hard-working public service workers across the country.”