Education Department to cancel billions in debt after lawsuit brought by teachers’ union.
The U.S. Department of Education agreed to cancel billions of dollars in federal student loan debt for up to 2.5 million borrowers under a court-approved settlement with the American Federation of Teachers (AFT). The agreement last month restores access to income-driven repayment (IDR) programs that cap payments based on income and forgive remaining balances after 20–25 years.
The teachers’ union had sued the department earlier this year, alleging that the administration had unlawfully halted forgiveness options. The settlement ensures that eligible borrowers can apply for relief through programs such as Income-Contingent Repayment, Pay As You Earn, and Income-Based Repayment.
Under the settlement, borrowers receiving forgiveness through 2025 will not face federal income tax on canceled debt. The Department of Education began notifying qualified participants in October, allowing them to accept or decline the discharge.
The case also highlights broader changes at the department, following President Trump’s March 2025 executive order to restructure it and shift more educational authority to state and local governments.
As the Lord Leads, Pray with Us…
- For Education Secretary McMahon as she oversees the restructuring of the department to empower state and local governance.
- For U.S. education officials as they comply with the court settlement to enact student loan forgiveness.
Sources: The National Pulse, Daily Overview, MSN
