Picture courtesy of Kttn.com

MIAMI – The President Donald Trump administration has agreed to cancel students loan debt for millions of borrowers, reserving a decision to collect billions of dollars in federal loans by seizing wages and Social Security payments.

The U.S. Department of Education announced the administration vowed to again process student loan forgiveness for eligible borrowers in two Income-Driven Repayment (IDR) plans. The programs include: the original Income-Contingent Repayment (ICR) plan; and the Pay As You Earn (PAYE) plan.

However, this is as long as those programs remain in effect. According to President Donald Trump’s “Big Beautiful Bill,” the administration will phase out ICR and PAYE as of July 1, 2028.

According to news reports, more than 2.5 million borrowers are currently in either ICR or PAYE.

In the agreement, the Trump administration clarified that borrowers who become eligible for student loan forgiveness in 2025 will not owe federal taxes on the relief given.

In addition, a law banning taxes on student loan debt canceled on the federal level expires at the end of 2025. Subsequently, borrowers with cancelled debt may face a huge tax liability moving forward.