Student loan waiver available again under ICR, PAYE: what you need to know

Millions of borrowers have access to student loan forgiveness again, but they may need to take steps to ensure they qualify.

The U.S. Department of Education will resume canceling debt for eligible borrowers enrolled in the Income Contingent Repayment, or ICR, plan and the Pay as You Earn, or PAYE, plan, according to an agreement reached between the American Federation of Teachers and the Trump administration.

Earlier this year, the ministry stopped canceling debt for borrowers in both plans, citing a court ruling.

Loan forgiveness opportunities have become rarer under the Trump administration. While President Joe Biden was in office, the U.S. Department of Education regularly announced it was wiping out hundreds of thousands of borrowers’ debts.

More than 40 million Americans hold student loans, and outstanding debt exceeds $1.6 trillion.

Some 2.5 million borrowers are enrolled in either ICR or PAYE, according to an estimate by higher education expert Mark Kantrowitz. The deal could allow more of these borrowers to receive forgiveness. But it’s a limited window.

President Donald Trump’s “big, beautiful bill” will phase out ICR and PAYE beginning July 1, 2028. The Department of Education has agreed to resume the relief only as long as ICR and PAYE remain in effect.

Here’s what borrowers need to know about resuming loan forgiveness under ICR and PAYE.

Both ICR and PAYE are income-driven repayment plans, meaning they cap a borrower’s bills at a share of their discretionary income and lead to loan forgiveness after a certain period; ICR after 25 years and PAYE after 20 years.

Borrowers have had access to debt forgiveness under ICR since 1994 and under PAYE since 2012.

Student loan borrowers also have access to forgiveness under the Income-Driven Repayment, or IBR, plan.

When the Department of Education reduced ICR and PAYE forgiveness earlier this year, officials said they were responding to a February court order that blocked a Biden administration-era repayment plan known as the Savings on Valuable Education, or SAVE, plan. Officials said the decision has implications for other reimbursement plans, although ICR and PAYE have both been available for more than a decade.

Consumer advocates and the American Federation of Teachers, a union representing some 1.8 million members, disagreed with the administration’s interpretation of the decision and said the agency was required to offer debt forgiveness under well-established programs. In its March lawsuit, the AFT accused Trump officials of preventing borrowers from benefiting from relief programs provided in their loan terms.

Before the AFT and the Department of Education reached an agreement, student borrowers who had built up enough credit to get forgiveness under ICR or PAYE would have had to switch to IBR to get their loans discharged, said Nancy Nierman, deputy director of the Educational Debt Consumer Assistance Program in New York.

“Now they don’t have to do that,” Nierman said. “They can stay in these plans and achieve forgiveness.”

Borrowers who want to cancel an application submitted to move to IBR can try calling the Federal Student Aid Information Center at 1-800-4-FED-AID, Kantrowitz said. You can also try contacting your student loan servicer to cancel your application.

Once PAYE and ICR are phased out, borrowers on plans that are not yet eligible for debt forgiveness will need to move to a repayment plan that still offers loan forgiveness. Payments made under PAYE and ICR will depend on the borrower’s timeline until relief, Nierman said.

Borrowers should keep track of the payments they have made, to ensure they do not lose any qualifying months.

An important point to note: continued access to IBR will only be available to those who borrow before July 1, 2026. Loans taken out after this date will void IBR eligibility.

Due to recent legislation, borrowers after this date will only be able to enroll in a new income-driven repayment plan called a “Repayment Assistance Plan” or RAP, or a revised standard plan.