The Trump administration’s new policy update to student loan forgiveness has involved both continuing existing programs and implementing significant restrictions. In October 2025, the Trump administration agreed to forgive student debt under income-driven repayment programs after initially blocking them, following legal pressure from the American Federation of Teachers.
Current Administration Actions on Student Loan Forgiveness
This agreement resulted from a settlement in the AFT v. U.S. Department of Education case, resolving months of tension over the government’s obligations to cancel student debt for qualifying borrowers. The agreement also ensures that borrowers who become eligible for debt cancellation in 2025 will not face federal tax penalties on the forgiven amounts.
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Donald Trump and Student Loan Forgiveness
Approximately 2.5 million borrowers are enrolled in either Income-Contingent Repayment or Pay-As-You-Earn plans, which are affected by these policy changes. The Department of Education began processing most loan discharges within two weeks after October 21, 2025.
At A Glance
The Trump administration agreed to forgive student debt under income-driven repayment programs in October 2025 after legal pressure. However, the administration has restricted Public Service Loan Forgiveness to exclude certain organizations and plans to phase out Income-Contingent Repayment and Pay-As-You-Earn plans by July 2028.
Key Takeaways
- 2.5 million borrowers affected by IDR plan changes
- PSLF restrictions implemented October 2025
- Income-driven repayment plans ending July 2028
- Over 1 million borrowers received PSLF under Biden
- $1.7 trillion in total student loan debt affects 42+ million Americans
Restrictions on Public Service Loan Forgiveness
One of the most significant changes under the Trump administration involves the Public Service Loan Forgiveness program. In March 2025, President Trump signed an executive order directing the Secretary of Education to revise PSLF to exclude organizations that engage in activities with a substantial illegal purpose.
The final rule was published in the Federal Register on October 31, 2025, implementing these restrictions. The new policy excludes organizations deemed to have ties to activities ranging from “supporting terrorism” to providing certain forms of gender-affirming care to minors.
Under President Joe Biden, more than 1 million people had their debts cleared under PSLF, whereas the Trump administration has been described as using the program to penalize organizations it opposes. The Trump administration estimates fewer than 10 organizations would be barred from the program per year.
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Phase-Out of Income-Driven Repayment Plans
President Trump’s legislative package, referred to as the “big beautiful bill,” will phase out Income-Contingent Repayment and Pay-As-You-Earn plans as of July 1, 2028. This represents a significant shift in the student loan landscape, as these programs have provided borrowers with payment options based on their income levels for decades.
Congress created the first income-driven repayment plans in the 1990s to make student loan borrowers’ bills more affordable by capping monthly payments at a share of discretionary income and canceling remaining debt after a certain period, typically 20 or 25 years.
Historical Campaign Positions
During his 2016 campaign, then-candidate Donald Trump proposed allowing borrowers to pay 12.5 percent of their incomes on federal loans and receive loan forgiveness after 15 years. He reiterated this proposal in May 2017 as part of his budget request to Congress, though the details showed that graduate students would face a new 30-year loan forgiveness term, up from the current 20-year term.
During his first term in office, Trump spent much of his tenure trying to weaken borrower defense to repayment rules, which allowed loan forgiveness for students who attended schools that deceived them. However, in March 2020, interest on all federal student loans waived off to reduce the financial burden on borrowers during the covid-19 pandemic.
Controversy and Legal Challenges
The Trump administration’s student loan policies have generated substantial controversy. Mike Pierce, executive director at Protect Borrowers, stated that the Trump administration released rules to “weaponize Public Service Loan Forgiveness against public service workers” and is using “student debt as a cudgel, opening a new front in his culture war”.
Michael Lukens, executive director of the Amica Center for Immigrant Rights, explained that many attorneys, social workers, and paralegals working on deportation defense and immigration litigation rely on public service loan forgiveness to take jobs that pay significantly less than the private sector.
The AFT lawsuit, filed in March 2025, initially challenged the Trump administration after it removed the application to enroll in income-driven repayment from government websites and issued instructions to student loan contractors to halt all enrollment and processing. After the lawsuit was filed, the government resumed accepting and processing applications.
Impact on Borrowers
More than 42 million Americans hold around a collective $1.7 trillion in student loan debt. The policy changes affect different groups of borrowers in varying ways. The federal government must file six monthly progress reports to update the court on the status of its application and loan cancellation processing as part of the settlement agreement.
For borrowers currently enrolled in income-driven repayment plans, experts recommend continuing to make payments even if forgiveness emails haven’t been received, as being flagged as late could cause problems, and any overpayments should be refunded.
The Trump administration’s position contrasts sharply with the previous administration’s expansion of forgiveness programs. Prior to Biden taking office, PSLF had forgiven debt for just 7,000 borrowers, but Biden expanded the program to erase student loans for over 1 million borrowers.
Future of Student Loan Forgiveness Under Trump Administration
The future of student loan forgiveness under the Trump administration remains uncertain, with ongoing legal challenges and policy implementations. The settlement agreement includes provisions requiring the Education Department to follow through on debt forgiveness for eligible borrowers in 2025 and protect them from surprise tax bills due to bureaucratic delays.
As the 2028 deadline approaches for the phase-out of certain income-driven repayment plans, millions of borrowers will need to evaluate their options and understand how these changes affect their individual circumstances. The ongoing debate reflects broader philosophical differences about the role of government assistance in higher education financing and debt relief.
