After months of silence and confusion, the U.S. Department of Education has resumed the process of federal student loan forgiveness for thousands of long-term borrowers. The measure, which was suspended for much of the year due to administrative and legal complications, offers renewed relief to those who have carried debt for decades.
For many, the news is both a relief and a reminder that financial stability still depends on unpredictable bureaucracies. The partial cancellation — initially aimed at borrowers who have completed 20 or 25 years of payments under income-driven repayment plans — represents both a symbolic victory and a clear example of how complex the American student-loan system remains.
A delayed relief
The first notices began arriving quietly in late October. In emails and official letters, the Department informed long-term borrowers that their remaining balances would be erased in the following weeks. For someone who has been paying for two decades, the message almost seemed unbelievable: after 240 or 300 installments, the debt would finally be forgiven.
The cancellation is part of the Income-Based Repayment (IBR) program, created by Congress in 2009. This plan allows monthly payments to be adjusted according to income and family size. After 20 to 25 years of payments, any remaining balance is forgiven.
But as is often the case in U.S. student-loan policy, the process is not straightforward. Throughout much of 2024, the cancellation program was suspended while the Department of Education reviewed systems and awaited legal guidance following a series of injunctions that affected other repayment programs.
“During months there were no loans forgiven under any income-driven plan,” said Winston Berkman-Breen, legal director of the organization Protect Borrowers. “Seeing the IBR program resume is more than an administrative fix. It’s a course correction long overdue.”
Practical impact: who will benefit first
The Department of Education stated that the forgiveness will be processed in waves, meaning eligible borrowers will not all receive the benefit at the same time.
In theory, borrowers who have already completed the required number of payments — 240 for loans taken after July 2014 and 300 for earlier loans — should be included automatically. No formal application is needed.
However, the exact schedule remains unclear. The agency said that most cancellations would be processed within two weeks after October 21, but acknowledged that individual cases might take longer.
“If you’ve made 300 payments and haven’t received a notice yet, it doesn’t mean you were forgotten,” explained Stanley Tate, a consumer-law attorney specializing in student loans. “The system is overloaded. The first batches are just the beginning.”
Tax issue: is the forgiveness really tax-free?
The good news is that at the federal level, the forgiveness will not be taxed. A temporary measure passed in 2021 exempts student-loan cancellation from federal taxes through the end of 2025.
For borrowers who have waited decades, this is an unexpected bonus: the debt disappears and the IRS doesn’t send a bill immediately afterwards.
But there are caveats. Some states may impose their own taxes, and experts warn that if Congress does not renew the exemption after 2025, the tax landscape could change.
“Borrowers who complete the required payments by 2025 will likely still benefit from the exemption,” says Abby Shafroth of the National Consumer Law Center. “But if the forgiveness is processed later, the scenario may shift.”
The legal maze: policy under pressure
The return of forgiveness under IBR does not mean the overall problem is solved. Other repayment programs — like SAVE, PAYE, and ICR — remain blocked by legal decisions triggered by lawsuits from state attorneys-general and governors.
The lawsuits argued that the Department of Education exceeded its authority when expanding student-loan forgiveness under the Biden administration. In response, the courts temporarily suspended the processing of cancellations under those plans, creating widespread paralysis.
IBR, however, remained protected because it was created via legislation passed by Congress, not solely by executive action. Yet the program still was affected indirectly: the Department of Education had to update its systems and calculations before resuming cancellations.
The American Federation of Teachers, one of the most vocal advocacy groups, filed court motions in September demanding the federal government process the forgiveness for borrowers who had already qualified.
“These people aren’t asking a favor. They’re asking that the promise of the program be fulfilled,” said Randi Weingarten, the federation’s president.
Between hope and skepticism
For borrowers, the announcement is both a relief and a reminder that financial stability still depends on changing policies.
“My loan originated in 1998,” says Laura Jennings, 49, a teacher in Michigan. “I made every payment required, but since the start of the year I’ve been in limbo. Receiving the email saying my balance would be forgiven was a shock — I still can’t believe it until I see the number go to zero.”
Others express caution. “I’ve heard this before,” says Carlos Mendoza, 38, a public-sector worker still waiting for an update. “The government changes its stance all the time. Until the money is gone from the statement, I won’t celebrate.”
What’s next: millions still stuck
Millions of borrowers remain trapped in plans blocked by the courts. Those enrolled in SAVE, PAYE and ICR are not receiving cancellations, even though many have met the required payments.
Some may find a workaround: switching to the IBR plan, which is active. But there are hurdles. Although Congress made all borrowers eligible for IBR in 2024, the Department of Education has not yet fully implemented that change, meaning some eligible borrowers are still being denied.
“There’s a gap between what Congress approved and what the system can process,” explains Shafroth. “It’s frustrating, especially for those who have waited so long.”
Meanwhile, the advice from experts is clear: keep paying your loans. Even if forgiveness is near, stopping payments without formal guidance may create additional issues. The Department of Education says it will refund borrowers who overpaid after qualifying.
For borrowers experiencing financial hardship, there are options. One is requesting a forbearance, which pauses payments without triggering delinquency — a kind of official hold until forgiveness is processed.
The future of student-loan forgiveness in the U.S.
The discussion around student-loan forgiveness reflects a deeper issue: the structural crisis in America’s higher-education funding. Today, the country carries over US$ 1.6 trillion in student-loan debt, held by more than 43 million people.
For an entire generation, student loans have ceased to be investment and have become economic chains. The promise of social mobility tied to higher education has collided with the reality of decades of payments that eat into income.
The Biden administration attempted to address the issue through the SAVE program, which reduced monthly payments and accelerated forgiveness, but legal obstacles persist.
In the meantime, IBR — the oldest and now the only fully operational program — has become a symbol of bureaucratic resilience: a gear that, though slow, keeps turning.
A forgiveness that is also a mirror
The cancellation of student-loan balances is not just a financial decision — it is a reflection of time. It shows how the country deals with debt, education and the future of its workforce.
For some, forgiveness is justice. For others, government overreach. But for those who paid for twenty years after graduating decades ago, the meaning is simple: end.
“It’s not about politics,” says Laura Jennings. “It’s about being able to breathe.”
And perhaps that is the most powerful message of the new chapter in America’s student-loan story: relief, even if late, is still possible.
