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How to find out if you qualify as Trump unveils plan to cancel student debt for millions of borrowers
In a significant shift, the Trump administration has announced plans to provide student loan forgiveness to millions of borrowers. This move comes after a period of uncertainty for many, as the White House had previously paused certain student loan repayment programs earlier this year.
The decision follows a legal dispute with the American Federation of Teachers (AFT), which sued the administration after the Department of Education halted processing applications for affordable repayment plans that included loan forgiveness options.
The AFT, which represents millions of teachers and other workers, claimed that the administration’s actions violated federal law. For some time, the only option available to borrowers was the Income-Based Repayment plan (IBR).
However, with this new agreement, the Trump administration has decided to resume processing loan forgiveness for borrowers eligible under the Income-Contingent Repayment (ICR) and Pay as You Earn (PAYE) plans. The move is expected to impact over 2.5 million borrowers, according to reports.
Who qualifies for loan forgiveness?
To be eligible for student loan forgiveness under the new arrangement, borrowers must meet certain criteria, The New York Post reports. Those working in specific public service roles, such as government employees, teachers, and individuals employed by nonprofit organizations, are eligible.
For teachers specifically, the forgiveness program applies to debts of up to $17,500. To qualify, teachers must have worked full-time for five consecutive academic years in a low-income school or educational service agency, as outlined by Federal Student Aid.
It’s important for borrowers to keep in mind that the ICR and PAYE programs will be phased out by July 2028. However, for now, individuals can check their eligibility for loan forgiveness on the Federal Student Aid website, which provides a detailed guide on how some borrowers can have their federal student loans forgiven or canceled entirely.
The impact on student loan repayment plans
This change is a significant step for those looking to manage their student loan debt, especially given the complexity of federal student loan programs. The suspension of repayment plans earlier this year left many borrowers in limbo, with limited options for managing their loans.
The resumption of the ICR and PAYE programs means that more people will have the opportunity to reduce their loan balances or even have their loans fully discharged.
In the coming years, as these programs phase out, it will be crucial for borrowers to stay informed about new repayment options that may become available. For now, those who qualify for the ICR or PAYE plans should take advantage of the relief and begin the process of loan forgiveness.