Student loan forgiveness: Possible even under Trump administration

On October 23, the day after Daniel Gray’s 56th birthday, he received an email that seemed like a dream come true. The U.S. Department of Education would forgive his student loan balance of more than $170,000.

“I couldn’t believe it,” Gray said. “This is the first time I’ve been debt-free since I turned 18.”

But this sense of relief wasn’t all that surprising.

Gray began repaying her student loans in the 1990s and was eligible for loan cancellation under the terms of an income-driven repayment plan. IDR plans erase the loan after a certain period of time (usually 20 or 25 years). But like many borrowers, Gray was concerned about reports that relief packages were becoming harder to access under the Trump administration.

“Given what’s going on, it was unclear whether they would be forgiven,” Gray said.

Mark Kantrowitz, a higher education expert, said many student loan borrowers have recently questioned whether they will be able to get the loan cancellations they are entitled to.

“Borrowers will be under extreme financial and emotional stress if they fear that the Trump administration will renege on the federal government’s promise of student loan forgiveness,” Kantrowitz said.

The U.S. Department of Education did not respond to a request for comment.

Earlier this year, the Department of Education ended debt forgiveness for borrowers in two long-standing student loan repayment plans: the Income-Contingent Repayment Plan (ICR) and the Pay As You Earn Plan (PAY). Debt forgiveness under income-based repayment plans (IBR) was also suspended.

More than 12 million student loan borrowers are enrolled in one of the Department of Education’s IDR plans, Kantrowitz said.

But then a big win for borrowers came in October. As a result of a lawsuit filed by the American Federation of Teachers, the Trump administration agreed to resume debt settlements for Americans under ICR and PAYE. In the same month, eligible borrowers enrolled in IBR began having their debts canceled again.

AFT alleged that Trump officials were interfering with the rights mandated to borrowers under the terms of the loans.

Weena Sanchez, a student loan counselor at the New York nonprofit Education Debt Consumer Assistance Program, said of Gray’s student loan forgiveness, “I can’t say for sure, but it’s possible that the AFT lawsuit was the trigger for his termination.” EDCAP cooperated with Gray’s request for relief. Mr. Gray had obtained loan cancellation by May 2024, according to the loan forgiveness statement.

“We have heard that other customers have received similar notifications,” Sanchez said.

But in an unprecedented change at the Department of Education, student loan borrowers continue to have their debts forgiven.

The Trump administration announced this week that it would transfer many of the Education Department’s programs to other government agencies, a move experts say is part of President Donald Trump’s directive to dismantle the department. Politico reported in October that Education Department officials were also exploring options to sell part of the $1.6 trillion federal student portfolio to the private market.

Regardless of what changes lie ahead, it’s important for borrowers to remember that the original terms of a student loan, as specified in the master promissory note, cannot be changed during repayment, Kantrowitz said. When a borrower signs that agreement, the law requires that programs that existed at the time remain available, including repayment plans that lead to loan forgiveness.

Student loans, like other types of debt, cannot be discharged through regular bankruptcy proceedings, so borrowers are “relying on the light at the end of the tunnel” to receive government forgiveness, Kantrowitz said.

“When low-income students are forced to borrow money to pay for college, pledging a lifetime of poverty shouldn’t be part of the deal,” he said.

Gray said she had been burdened by student loan debt for about 30 years. He graduated from the University of California, Santa Barbara in the mid-1990s with a degree in film studies and went on to work in technical roles in video and television production.

But in the years that followed, he said, he struggled with substance abuse issues and clinical depression. As a result, his career took a hit and Gray struggled to keep up with his monthly student loan payments, he said. Initially, he borrowed about $30,000, but the balance steadily increased due to interest.

“This system is designed for students to graduate, get good jobs, and start paying money,” Gray said. “But what about those who can’t get their lives back on track until they’re 37 or 38?”

By then, he said, his debt was already close to six figures. By the time the government canceled his debt in October, his balance had ballooned to more than $170,000.

“I couldn’t believe I had let it go this long. I felt incredibly guilty and ashamed,” Gray said, but added: “I also felt like the whole situation was set up to take advantage of the borrower.”

In 2011, Gray was offered a job at a television studio in Brazil. Dissatisfied with the cost of living in the United States, he moved to São Paulo hoping for a big change. Since then he has lived in Brazil. There he met his current husband, chef Douglas. The couple lives near the beach and takes their dog for long walks every day.

The biggest change Gray has noticed since getting rid of his student loans is psychological: “I suddenly feel more relaxed,” he says.

“It’s easy for people to say, ‘Why don’t people pay them back? What’s the big deal?'” Gray said of student loans.

But, he continued, “We reached a situation that was out of control. It seemed impossible. Student loan forgiveness is the only solution for many people.”