Student Loan Relief Program Restarts After Long Pause

Washington, D.C. — After several months of delay, a vital student loan program is now back in action. Over the past week, borrowers participating in income-based repayment (IBR) plans began receiving emails from the Department of Education. The notifications inform them that they meet the payment threshold for debt cancellation.

The emails, which have been reviewed by Business Insider, carry the subject line: “You’re eligible to have your student loan(s) discharged.” According to the messages, the department is coordinating with loan servicers to process these discharges over the next few months, with final information being sent after October 21.

IBR plans are designed to make monthly payments manageable based on borrowers’ income, offering the promise of loan forgiveness after 20 to 25 years of payments. Federal Student Aid data indicates that 2 million borrowers were enrolled in IBR as of the second quarter of 2025.

The Department of Education announced that it has required time since July to ensure the payment counts are accurate. The emails remind borrowers that their loan servicer will notify them when their debt relief has been processed. “Most borrowers will have their discharge processed within two weeks, but for some, it may take longer,” the email stated.

Borrowers can opt out of the IBR relief by contacting their loan servicer before October 21. Those who choose to opt out may do so to avoid potential state tax implications; however, they will still need to keep making payments on their loans.

Time is of the essence for these borrowers. A provision within the American Rescue Plan, which designates forgiveness as tax-free, is set to expire. As a result, any borrowers receiving debt relief after January 1, 2026, might face significant tax liabilities.

The American Federation of Teachers filed a complaint in September, urging the Department of Education to support borrowers who have reached their payment thresholds before the tax implications return.

While IBR processing is resuming, the Trump administration continues to undertake steps that affect student loan repayment options. Negotiations related to these changes began on October 3, focusing on replacing current income-driven repayment plans with alternatives that may offer less favorable terms.

James Bergeron, acting head of Federal Student Aid, stated in a September release, “Unlike the previous Administration’s focus on loan forgiveness, the Trump Administration is taking action to implement meaningful and necessary enhancements to the way student loans are serviced to better serve borrowers and American taxpayers.”