The Education Department may start accelerating student loan forgiveness processing in February for certain borrowers in income-driven repayment plans, according to a recent court filing. The update may be good news for borrowers, although much uncertainty remains.
The filing suggests that the Trump administration will abide by an agreement the Education Department entered into last fall to resume processing loan forgiveness for eligible borrowers with student loans enrolled in several IDR plans. But the department’s implementation of that agreement has been sluggish, likely due to a combination of factors including system issues and the recent government shutdown. The next several months will be critical for borrowers to assess whether the department is successfully implementing that agreement. Here’s what student loan borrowers should know.
Education Department Agreed To Resume Student Loan Forgiveness Processing
The American Federation of Teachers, a national teachers union, filed a lawsuit against the Education Department last year over delayed or stalled applications related to income-driven repayment plans and Public Service Loan Forgiveness. The AFT subsequently expanded its legal challenge to include allegations that the department had suspended student loan forgiveness processing for the IBR, ICR, and PAYE plans (income-driven repayment plans that offer student loan forgiveness after 20 or 25 years in repayment). The department had contended that it had to pause loan forgiveness under these programs in response to court orders related to a lawsuit challenging the SAVE plan, a separate IDR plan that has been mired in court battles for nearly two years.
In October, the AFT and the Education Department entered into a court-approved interim agreement. Under that agreement, the department agreed to resume processing student loan forgiveness under the IBR, ICR, and PAYE plans.
“The defendants shall continue processing loan cancellations for borrowers who are eligible for cancellations under the Income-Based Repayment (’IBR’) plan,” said the agreement. “The defendants shall continue processing loan cancellations for borrowers who are eligible for cancellation under the Original Income Contingent Repayment (“ICR”) and Pay As You Earn (“PAYE”) plans as long as these plans remain in effect.” ICR and PAYE will be phased out under the One Big, Beautiful Bill Act, but not until 2028.
The Education Department also agreed to file monthly status reports with the court, providing the litigants and the public with data reflecting student loan forgiveness processing.
Student Loan Forgiveness Processing Expected To Expand In February
In December, the Education Department filed its first post-agreement status report with the court after the government reopened following an extended shutdown. The department had agreed to provide details in its monthly reports including the number of borrowers who had their student loans forgiven under the IBR, ICR, and PAYE plans.
But alarmingly, the report indicated that only 170 borrowers received student loan forgiveness under the IBR plan during the month of November. And exactly zero borrowers had their student loans forgiven under the ICR and PAYE plans.
The low numbers for student loan forgiveness are likely due to a combination of factors, including the fact that the government had just reopened after an extended shutdown. In addition, the low figures may not be truly representative of actual discharges under IDR plans, as there is a lag period between between when a borrower is approved for a loan forgiveness and when their student loans are actually cancelled.
“The number of applications decided in a given month will not necessarily line up with the number of loan discharges in that month,” explained the department in its court filing. “A borrower has the opportunity to decline an IDR discharge. As such, when ED notifies IDR borrowers of their discharge eligibility, it provides a two-month opt-out period.”
For example, “In October 2025, ED sent a set of discharges to student loan servicing companies for processing,” continued the department. “Many of these discharges were processed in early December 2025, and are not reflected in the November 2025 statistics.”
The department also indicated in the status report that its systems were not yet set up to process loan forgiveness under the ICR and PAYE plans. Officials expect those systems to be updated by February, which may allow for more robust processing of discharges of student loans under all three IDR plans.
The department’s primary computer database for federal student loans called the National Student Loan Data System, or NSLDS, “is currently programmed to check eligibility for discharges under the Income-Based Repayment plan, but not any other IDR plans,” explained the department. “ED is working on the programming for the other IDR plans, and anticipates that starting in February 2026, NSLDS will check eligibility on a regular basis (every other month).”
That suggests that student loan forgiveness should ramp up starting in February. However, borrowers and the public at large may not have a good sense of the Education Department’s progress until April or even May, given the lag period between discharge approvals and implementation, as well as the delay in reporting (the monthly status reports filed in court provide data reflecting student loan forgiveness approvals for the previous month).
Student Loan Forgiveness Remains Blocked Under The SAVE Plan
Borrowers should be aware that while the Education Department is resuming student loan forgiveness processing for eligible borrowers under the IBR, ICR, and PAYE plans, it is expressly not processing discharges for student loans in the SAVE plan. Last month, the department entered into a final settlement agreement with a group of state challengers that is awaiting court approval; under the terms of that settlement, the SAVE plan will be eliminated, and borrowers enrolled in the program cannot receive a discharge.
“Defendants will not forgive loans under the SAVE Plan (or under the REPAYE plan) using the Department of Education’s income-contingent repayment (ICR) authority, Higher Education Act of 1965 § 455, 20 U.S.C. § 1087e, as it was interpreted by the SAVE Plan Final Rule,” reads the agreement.
Once the agreement is approved by the court and finalized, borrowers with student loans enrolled in the SAVE plan will likely be forced to switch to IBR, ICR, or PAYE, depending on their eligibility. The Education Department is also planning on launching a new income-driven repayment plan called the Repayment Assistance Plan, or RAP, later this year. However, RAP will require payments for at least 30 years before a borrower can qualify for student loan forgiveness, which is much longer than the current IDR options.
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