Trump Admin’s Student Loan Forgiveness Notices Arrive During Government Shutdown: What Borrowers Need to Know

Remember when the government shutting down meant everything stopped? Not this time.

If you've been making student loan payments for decades, you might have just gotten an email from the Department of Education saying your loans will be forgiven. Here's what's happening and why it matters.

Key takeaways

• The Department of Education is sending forgiveness notices to IBR borrowers despite the government shutdown
• IBR loan forgiveness was paused in July 2025 but started back up for borrowers who've made 20-25 years of payments
• Borrowers have until October 21, 2025 to opt out if they choose

Why is loan forgiveness happening during a shutdown?

The Department of Education stopped IBR forgiveness back in July. They needed to respond to court orders about which payments should count toward forgiveness. Borrowers who'd been paying for 20+ years got stuck with debt they shouldn't technically owe anymore.

That created big problems. The American Federation of Teachers sued the Trump administration in March, saying it violated borrowers' rights. The union represents nearly 2 million members who depend on these programs.

Now, even with the shutdown, those forgiveness notices are going out. The emails say loans will be discharged "over the next several months."

TuitionHero Tip

If you get a forgiveness notice, save it right away and keep copies. You'll want that documentation if problems come up later.

What is the IBR plan, and why does it matter?

Income-Based Repayment (IBR) calculates your monthly payment based on what you earn, not just what you owe. After you make payments for enough years, any leftover balance gets wiped out.

IBR forgiveness timeline:

Here's the big deal: After Congress passed Trump's recent bill, several student loan plans got phased out. IBR is now the only plan left that offers debt forgiveness.

Who's getting these forgiveness notices?

You'll get a notice if you:

• Are enrolled in an IBR plan
• Made 20 years of payments (undergrad loans) or 25 years (grad loans)
• Have your account in good standing
• Had your payment history verified by the Department of Education

The notices aren't going to everyone in IBR. Just those who hit their forgiveness milestone and had their cases reviewed during the pause.

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Should you opt out of forgiveness?

The notices give you until October 21, 2025 to say no to forgiveness. Why would anyone turn down free money?

Taxes.

Student loan forgiveness is tax-free through the end of 2025, but Trump's recent bill didn't extend that protection. If your loans get forgiven in 2026 or later, you'll owe federal income tax on the forgiven amount.

Tax impact example:

So if $50,000 gets forgiven next year, the IRS treats that like you earned $50,000. You could owe $12,000 in taxes.

Opt out if:

• Your remaining balance is under $10,000
• You're almost done paying anyway
• You can't afford a big tax bill next year
• You're in a high tax bracket

Accept forgiveness if:

• You still owe $30,000 or more
• Paying off your loans will take years
• The tax bill is still way less than what you owe
• You can save up for the tax payment

TuitionHero Tip

Talk to a tax professional before deciding. Your specific income and state tax situation matters.

What if you're still waiting for forgiveness?

Tons of borrowers are still waiting for their forgiveness decisions. The shutdown makes processing even slower.

If you're waiting for your IBR forgiveness:

• Your application is probably still in line
• Nobody knows how long processing will take
• Keep making your monthly payments
• Missing payments could restart your forgiveness clock
• Write down every call or email with your servicer
• Check your account weekly

Problems that need attention now:

• No response after 60+ days
• Wrong payment count on your account
• Loans showing the wrong repayment plan
• Missing payment history from old servicers
• Forbearance or deferment counted wrong

What should you do right now?

Check your email and loan servicer account. If you got a forgiveness notice, follow these steps:

• Step 1 - Check the details: Make sure the forgiveness amount looks right based on your loan history.
• Step 2 - Calculate the tax hit: Use the table above to estimate what you might owe in taxes.
• Step 3 - Decide by October 21: You don't have long to choose. Missing the deadline means automatic forgiveness.
• Step 4 - Save everything: Screenshot emails, download PDFs, print notices. Keep it all in one folder.
• Step 5 - Update your contact info: The Department needs to reach you if something comes up.

If you think you should qualify but haven't gotten a notice, call your loan servicer. Have your payment history ready.

How does this affect other forgiveness programs?

Public Service Loan Forgiveness (PSLF) works separately from IBR. Earlier this year, Trump signed an order to change PSLF eligibility rules. Those changes aim to limit who qualifies.

PSLF forgives loans after 10 years of payments while working for government or nonprofit organizations.

Teacher loan forgiveness, disability discharges, and closed school discharges all follow different rules. Those programs haven't been paused like IBR was.

Your options if forgiveness is years away

If you're not close to forgiveness yet, here are your other choices.

Repayment strategy comparison:

Before you refinance, know this:

• You need decent credit (650+)
• You lose all federal loan protections
• No forgiveness ever
• You can't go back to federal plans

What you keep with IBR:

• Payments based on your income
• Forgiveness after 20-25 years
• Options for forbearance or deferment
• Protection if your income drops

Everyone's situation is different. What works depends on how much you owe, what you earn, and your career plans.

TuitionHero Tip

Use our calculator to compare repayment options. Seeing the actual numbers helps you pick the best path.

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 the government shutdown delay my loan forgiveness?

If you already got a notice, your forgiveness should still happen in the next few months. New applications will probably face delays until the shutdown ends.

Can they take back forgiveness after they give it?

Once your loans are discharged and you get confirmation, it's final. They can't reverse it unless they find fraud or major errors. Policy changes don't affect forgiveness that's already done.

What if I think my payment count is wrong?

Contact your servicer immediately. Ask for a detailed payment history showing what counted and what didn't. Some payments get excluded because of forbearance or other reasons. You can dispute errors, but it takes time.

Do I need to accept the forgiveness?

No. Unless you opt out by October 21, it happens automatically. You don't submit paperwork or do anything. Just wait for confirmation.

What happens to my credit score?

Forgiveness doesn't hurt your credit. The loans show as paid on your credit report. Your score might actually go up if your debt drops. The bigger worry is taxes, not credit.

Final thoughts

Getting a forgiveness notice during a shutdown is weird, but for borrowers who've paid for 20+ years, it means real financial freedom. The timing creates problems with taxes and getting answers, but these programs still exist.

If you got a notice, take time to understand what it means for you, and if you're still waiting, document everything and stay on your servicer. At TuitionHero, we're tracking all these changes and have tools to help you figure out your next move.

Source

• Trump administration sends student loan forgiveness notices during government shutdown