Breaking: Trump Education Dept. Agrees to Process Delayed Student Loan Forgiveness

If you've been waiting for your student loans to be forgiven, you might finally get some good news. On Friday, October 17, 2025, the Department of Education made a deal with the American Federation of Teachers. They agreed to start canceling loans again for people who already qualify.

Here's the problem: thousands of borrowers did everything right. They made all their payments. They worked the required jobs for forgiveness. But their loans never got canceled. This settlement is supposed to fix that.

Key takeaways

• The Education Department settled a lawsuit on October 17, 2025, and will now resume student loan cancellations
• This helps people waiting for Public Service Loan Forgiveness and income-driven repayment forgiveness
• If you already qualify for forgiveness but haven't gotten it yet, your case should finally move forward

Why did this happen?

The American Federation of Teachers got tired of waiting. They represent teachers and other education workers who qualify for loan forgiveness. Many of their members made 120 payments (that's 10 years of payments) and still owed money.

So the AFT sued the Trump administration's Department of Education. They said the government was breaking its promise by not processing forgiveness applications.

The Department of Education decided to settle instead of fighting in court. Now they have to actually do what they promised: cancel loans for people who earned it.

Who gets help from this settlement?

This settlement doesn't create new ways to get forgiveness. It just makes the Department follow through on programs that already exist.

You might benefit if you're in one of these groups:

1. Public Service Loan Forgiveness (PSLF)

• You made 120 qualifying payments (10 years)
• You work full-time for a qualifying employer like:
  • Public schools
  • Government agencies
  • Nonprofits
  • Hospitals and medical centers

2. Income-Driven Repayment (IDR) Forgiveness

• You've been paying for 20 or 25 years (depends on your plan)
• You're on plans like SAVE, PAYE, IBR, or ICR
• Your payment amount is based on your income

3. Stuck in processing

• Your application was approved
• But your loans never actually got canceled
• You're still making payments even though you shouldn't be

The keyword here is "eligible." If you don't meet the requirements yet, this settlement won't help you right now. But if you already earned forgiveness and didn't get it, this is your chance.

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What will the Education Department do now?

The settlement makes the Department do three things:

1. Review all the pending applications sitting in their system
2. Check which borrowers actually qualify
3. Cancel the loans for everyone who's eligible

They also have to report on their progress regularly. That means they can't just ignore this and hope it goes away.

If you submitted your paperwork months ago, check your loan account soon. Things should start moving in the next few weeks.

TuitionHero Tip

Set a reminder to check your loan servicer website every two weeks. Look for any updates or messages about your forgiveness status.

What should you do if you're waiting?

Here's your action plan:

• Step 1 - Check your loan account: Log into your federal student loan servicer website. Look for messages or updates about your application.
• Step 2 - Update your contact info: Make sure they have your current email, phone number, and address. You don't want to miss important news because they couldn't reach you.
• Step 3 - Don't resubmit paperwork: If you already sent in your forms, don't send them again. That might actually slow things down. The Department has to work through what's already there.
• Step 4 - Verify your payment count: For PSLF, make sure your servicer counted all your qualifying payments correctly. For IDR forgiveness, check that they have the right dates.
• Step 5 - Keep records: Save copies of everything:
  • Forms you submitted
  • Employment certifications
  • Emails from your servicer
  • Payment history

If something goes wrong, these records will save you.

Quick comparison: PSLF vs. IDR forgiveness

Will this help future forgiveness programs?

Not directly. This settlement only fixes the current backlog. It doesn't create new forgiveness options or change who qualifies.

But it does set a precedent. The Department can't just ignore people who qualify anymore. If they try, they might face more lawsuits.

The bigger fights about expanding forgiveness continue separately. Those debates happen in courts and Congress. This settlement is different because it's about keeping promises already made.

Common mistakes to avoid

• Mistake #1: Thinking all federal loans will be forgiven
  • Only people who meet specific requirements get forgiveness. Most borrowers don't qualify yet.
• Mistake #2: Waiting for automatic forgiveness without applying
  • PSLF requires paperwork. You have to submit employment certification forms and a final application.
• Mistake #3: Assuming your servicer tracks everything correctly
  • Check your payment counts yourself. Servicers make mistakes all the time.
• Mistake #4: Not staying on a qualifying repayment plan
  • For PSLF, you need to be on an income-driven plan or the standard 10-year plan. Other plans don't count.
• Mistake #5: Changing jobs without checking if your new employer qualifies
  • Not all employers qualify for PSLF. Verify before you switch jobs if you're counting on forgiveness.

What if you don't qualify yet?

If you're still working toward forgiveness, keep going. Don't get discouraged.

For PSLF:

• Submit your employment certification form every year
• Keep track of your qualifying payment count
• Make sure you're on a qualifying repayment plan

For IDR forgiveness:

• Recertify your income every year
• Stay on your income-driven plan
• Keep records of every payment

Some borrowers decide to pay off their loans faster instead of waiting for forgiveness. That might make sense if:

• You're early in your career and have many years until forgiveness
• You got a higher-paying job outside public service
• You can refinance to a much lower interest rate

TuitionHero Tip

Run the numbers before changing your strategy. Sometimes what feels right emotionally doesn't make sense financially. Our calculators can help you compare options.

Dos and don'ts while waiting for forgiveness

Why trust TuitionHero

At TuitionHero, we help you find the best private student loans by comparing top lenders and breaking down eligibility, interest rates, and repayment options. Whether you need additional funding beyond federal aid or a loan without a cosigner, we simplify the process. We also provide expert insights on refinancing, FAFSA assistance, scholarships, and student credit cards to support your financial success.

Frequently asked questions (FAQ)

Will my loans be canceled automatically now?

No. You still need to qualify and have applied for forgiveness. The settlement just makes the Department process applications that have been sitting there ignored. If you never applied, you need to do that first.

How long until I see results?

Nobody knows the exact timeline. The settlement requires progress but doesn't give specific deadlines. Cases that have been waiting longest will probably get handled first. Expect weeks to a few months, not days.

What if I'm not sure I'm affected?

Log into your servicer account and check your status. If you submitted PSLF forms or hit your IDR forgiveness date but didn't get your loans canceled, you're likely affected. Call your servicer if you're unsure.

Should I get a lawyer?

Probably not yet. The settlement should resolve most cases without individual legal action. Wait and see if your case gets processed. If the Department ignores the settlement completely, then consider legal options.

What happens if the government changes?

Settlement agreements usually stay in place even when new people take charge. The Department agreed to these terms legally. A new administration would need strong reasons to break the agreement. That said, other loan policies could still change.

Final thoughts

This settlement is a win for borrowers stuck in limbo. If you've met all the requirements but haven't gotten forgiveness, relief is finally coming.

For thousands of public service workers, this means the end of loan payments they shouldn't have been making. Check your account regularly, keep your records, and don't give up on the forgiveness you've earned.

TuitionHero is here to help you track your progress and understand your options. Whether you're pursuing forgiveness or exploring other repayment strategies, we've got tools to make it simpler.