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Student Loan Forgiveness Resumes, Delays Still Expected
Last week, the Department of Education (DOE) announced it will resume forgiveness for qualifying borrowers enrolled in the Income-Based Repayment (IBR) plan. Forgiveness was previously paused due to legal challenges. Borrowers who have made payments for 25 years through the plan can still expect processing delays during the ongoing government shutdown.
The American Federation of Teachers (AFT) recently filed a federal claim against the DOE arguing that ongoing delays of granting student loan forgiveness is “unwarranted and unlawful.” On Oct. 3, the AFT amended its complaint to argue that the DOE is also illegally restricting forgiveness under income-driven repayment plans like the IBR, Income-Contingent Repayment and Pay as You Earn programs.
As of Aug. 31, the backlog for borrowers due to receive forgiveness through the Public Service Loan Forgiveness program totaled over 74,500.
Beginning in January 2026, loan forgiveness will once again be treated as taxable income with the expiration of the American Rescue Plan.
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