What to know about Trump’s changes to student loan forgiveness rules

This original article appeared on The Conversation.

The Trump administration has attempted to turn many aspects of American life upside down, and many aspects of higher education are no exception.

The Department of Education announced on October 27, 2025, that it would resume canceling student loan debt for some borrowers, after the government halted the practice earlier in 2025.

The Trump administration also announced on October 30 that it plans to limit loan forgiveness eligibility for former students who work at nonprofit organizations and whose work has what the Trump administration calls a “substantial illegal purpose.” This means organizations that work with immigrants and transgender youth.

Read more: Trump’s new rule prohibits student loan relief for public sector workers associated with “illegal” activity.

Amy Lieberman, education editor at The Conversation US, spoke with Jennifer L. Steele, an education economics researcher, came to understand the importance of these ads and what student loan borrowers should know.

How big is the student loan debt problem?

There is currently over $1.6 trillion in student loan debt in the United States. This number has risen dramatically over the past few decades. About 52% of federal loan borrowers are on track to pay off their loans within 10 years.

Some people find it difficult to manage their debt levels and miss scheduled payments. This is especially true for people who did not finish school or who attended for-profit colleges. It may also be difficult for people to repay their loans if they work in public service jobs that don’t pay a lot of money.

A person with the average amount of federal college student loan debt pays about $299 per month over the 10 years it typically takes to pay off the loans. They can pay much more if they have debt from graduate school as well.

How can you qualify for student loan forgiveness?

Student loan forgiveness means that after people have repaid their federal student loans for a certain number of years, the balance is forgiven by the Department of Education, which issues the loans.

There are two main types of federal student loan forgiveness plans. There are income-driven repayment plans and public service loan forgiveness plans.

Income-driven repayment plans are used by people who do not earn enough money to easily meet the monthly payment on a standard 10-year repayment plan. In these cases, the Department of Education offers options that allow you to pay no more than 10% to 20% of your discretionary income toward your loans each month.

After the borrower has made the required monthly payments on time for 20 to 30 years, depending on the plan, the federal government will forgive any remaining balance.

It is important to know that the amount to be forgiven may be subject to income tax, starting in 2026.

Borrowers who work full-time for the federal, state, local, or tribal government — including schools and the military — can have their remaining debt forgiven after 10 years of monthly payments through Public Service Loan Forgiveness. This also applies to people who work in non-profit, non-partisan organizations.

How are these standards changing for federal student loan forgiveness?

In March 2025, the Trump administration began slowing the Public Service Loan Forgiveness application process for some borrowers. It also pledged to vet public service employers who qualify as non-profit and nonpartisan groups.

The administration issued new rules on Oct. 30 that will disqualify borrowers from receiving the new Public Service Loan Forgiveness credit if their employers are found to have a “substantial unlawful purpose.” This includes organizations that provide support for undocumented immigrants, children seeking medical gender transition, or for speech that the administration deems supports terrorist, violent, or discriminatory ideas. My research has shown that public service incentives help attract skilled workers to work for nonprofits and other organizations that try to help people. This shift may make it difficult for organizations that help vulnerable communities to attract and retain employees.

Also in March, the Trump administration stopped processing clemency applications under some income-driven repayment plans, arguing that a recent court ruling that blocked a certain clemency plan initiated by then-President Joe Biden applied to other plans as well.

In response, the American Federation of Teachers filed a lawsuit in March demanding that loan forgiveness be restored to eligible borrowers.

School teacher Kelly Elizabeth Belt fills out paperwork to pay off her student loan as she tries to navigate policies under the Trump administration, in Provo, Utah, May 30, 2025. Photo by Jim Urquhart/Reuters

In October, the American Federation of Teachers and the Trump administration reached an agreement. Now, the Department of Education will resume processing student loan forgiveness applications for people who need financial assistance to repay loans and for people in public service. However, public service workers may find that their work is now deemed to have an “unlawful purpose,” according to the White House, challenging their pardon.

They also agreed that loans eligible for tax relief until 2025 will remain tax-free. In 2026, most student loan debt forgiveness will become taxable as income. There is an exception for public service workers and former students affected by college closures or fraud.

What does the new agreement mean for people with student loans?

People who already make monthly payments on existing federal student loans under income-driven repayment can continue to do so. People on a standard 10-year repayment plan who cannot afford their payments should learn about their income-based repayment options and talk to their loan servicer if they want to be considered for such a plan.

Also, starting in 2026, the Department of Education will offer a new type of income-based repayment plan called a Repayment Assistance Plan. The department will begin phasing out some older income-based plans in 2028.

How does this affect people thinking about going to university or postgraduate study?

If you’re thinking about attending college or graduate school, it’s important to know that the lifetime federal debt limits for graduate degrees have been reduced modestly through the tax credits and spending cuts bill signed into law in July 2025. Lower federal debt limits reduce the amount of debt borrowers can accumulate.

People who plan to enter public service with the expectation of having their loans forgiven after 10 years should do so with modest caution. Public Service Loan Forgiveness was created by Congress to encourage public service jobs, making it difficult to eliminate entirely. On the other hand, the Department for Education has discretion over which organizations are considered public service employers, as new rules issued on 30 October make clear. The Department also has discretion over how easily and quickly loan forgiveness applications can be processed.

Given the Trump administration’s general skepticism not only of public service loan forgiveness, but also of public service employment in general, it will likely continue to undermine this incentive for public service workers.

Borrowers can help their cause by annually certifying their employment with a qualified public service employer and by maintaining records of their loan eligibility, repayment plan, and monthly payments. Because Public Service Loan Forgiveness eligibility for employers may change under the administration’s rules issued on October 30, borrowers should also stay up to date on the eligibility of their current or potential employers.

Typically, taking on some debt to earn a degree isn’t a bad investment. You just have to be careful about how much debt you have accumulated and whether it is reasonable given how much you expect to earn after graduation. There are simple online tools that can help you determine whether an investment and potential debt load are worthwhile.

This article is republished from The Conversation under a Creative Commons license. Read the original article.