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Trump and Student Loans: What’s Happening With Forgiveness, FAFSA and More
The FAFSA is open — and the federal government's back, too. Here's how the latest news affects current and future borrowers.
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Let's break down the latest news that affects student loan borrowers.
Wondering what's changing for borrowers in 2026? Our guide has you covered.
IDR and PSLF Buyback application processing lags
The Education Department (ED) released a status report detailing the processing numbers on Income-Driven Repayment (IDR) plan and Public Service Loan Forgiveness (PSLF) Buyback applications on Dec. 15. The ED is required to share this info as part of an October court order in a lawsuit brought by the American Federation of Teachers back in March 2025.
The Dec. 15 status report details the number of applications for Income-Driven Repayment plans and PSLF Buyback received, decided, pending and discharged between Nov. 1-30. Here’s the breakdown:
IDR applications
Received: 157,408.
Decided (approved or denied): 245,441.
Discharged: 170.
Pending (as of Nov. 30): 802,730.
PSLF Buyback applications:
Received: 3,960.
Decided (approved or denied): 2,960.
Discharged: 280.
Pending (as of Nov. 30): 80,210.
The Oct. 17 agreement between the ED and the AFT was hailed as an important milestone, as the ED agreed to resume loan forgiveness processing for borrowers on the Income-Contingent Repayment (ICR) plan and Pay As You Earn (PAYE) as well as borrowers on Income-Based Repayment (IBR). In reality, the ED is still only processing IBR forgiveness.
IMPORTANT: SAVE borrowers who qualify for forgiveness but are stuck on SAVE need to submit an application to enroll in another IDR plan before Dec. 31, 2025 for that forgiveness to be processed. Even if a SAVE borrower's IDR application hasn't been processed when they hit the required number of payments — so they're still technically on the SAVE plan when their loans should be cancelled — that forgiveness will be processed. Eventually.
What does this mean?
The data is bleak for current borrowers looking to change IDR plans or get forgiveness through PSLF. The current state of the ED certainly isn't helping processing times, which already lagged.
It will likely get worse before it gets better. ED announced the end of the SAVE plan on Dec. 9, following a proposed settlement in the ongoing SAVE lawsuit. (More on that below.) That means borrowers currently enrolled in SAVE will need to change to a new payment plan soon. The speed at which the ED is processing IDR applications is already worrisome and may result in borrowers paying more than they can afford until they can get onto new plans.
On top of that, PSLF Buyback applicants waiting for word on their loan discharges are unlikely to receive an update any time soon. The department processed under 3,000 applications in November and still has more than 80,000 to process — and that's not including any new applications submitted this month.
What action should borrowers seeking forgiveness take?
Unfortunately, there isn’t anything borrowers can do to make their applications move faster. The bright side is that borrowers who qualify for forgiveness in 2025 are exempt from paying federal taxes on the forgiven amount even if forgiveness isn't processed until 2026.
In the meantime, if you're someone who has reached forgiveness eligibility, you’ll still have to make payments until the loan's balance is discharged to avoid default. (Alternately, you could ask your servicer if forbearance is an option.) An October agreement in the AFT lawsuit affirmed both the tax issue and that ED must refund any payments made after the borrower hit forgiveness eligibility.
SAVE plan is dead
On Dec. 9, the Education Department announced a proposed settlement that would resolve a long-running lawsuit against the Saving On a Valuable Education (SAVE) repayment plan.
Though the settlement is pending court approval, that's pretty much a formality. With the announcement, we've got official word that the SAVE plan is done. What we still don't know is the exact timeline SAVE borrowers face, though the ED has stated that borrowers will have a "limited time" to change plans.
Who killed SAVE?
The SAVE plan launched in 2023 under the Biden administration, and enrolled 8 million borrowers at its peak. The plan's low monthly payment amounts, interest subsidies and relatively short forgiveness timeline made it a popular option. But a lawsuit filed by Republican-led states in April 2024 challenged the plan's legality. That summer, a court injunction blocked the repayment plan from operating during the litigation, and SAVE borrowers were placed in an involuntary forbearance.
Borrowers were encouraged to move off of the SAVE plan during that time, as months in forbearance did not count toward income-driven repayment forgiveness or Public Service Loan Forgiveness. In August 2025, SAVE borrowers got even more incentive to swap when the Education Department restarted interest accrual.
SAVE wasn't going to last anyway, as all current income-driven repayment plans except Income-Based Repayment will be sunset by July 1, 2028 as part of the One Big, Beautiful Bill Act. But this settlement will likely speed up the timeline for SAVE borrowers.
What should SAVE borrowers do?
Borrowers who are still on the SAVE plan don't need to take action immediately, but do need to realize that SAVE is not coming back. When the Education Department issues guidance, that guidance is likely to be 'You have until this date to switch to another plan. If you don't switch on your own, ED will choose for you.'
If you're looking at income-driven repayment plans, here are your options:
Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) are still technically available, though those plans will be phased out by July 1, 2028.
Income-Based Repayment (IBR) will remain an option for current borrowers who don't take out any additional loans after July 1, 2026.
Starting in July 2026, the new Repayment Assistance Plan will also be available. RAP will be the only income-based repayment option for any federal student loans taken out after July 1, 2026.
Any of these options are likely to be burdensome for borrowers compared with their original SAVE payments, let alone the year-plus of nonpayment that the SAVE forbearance allowed. The Education Department recommends using its Student Loan Simulator to compare what payments would be like under different plans. Unfortunately, all of these plans will be pricier than SAVE.
Nerdy Perspective
My husband has student loan debt from law school and undergrad. We’ve been in the SAVE plan since it first rolled out. As of Dec. 17, we haven’t enrolled in a new payment plan, but we looked at our options and are satisfied with a payment plan through Nelnet (the loan servicer). We are making monthly interest payments until we hear the final options for SAVE borrowers. My husband also works for the city and would qualify for PSLF in about nine years (assuming nothing changes there), so we’re hoping to utilize that.
Julie Myhre-Nunes
Student Loans Editor
FAFSA open for the 2026-2027 academic year
The FAFSA for the 2026-2027 academic year is open as of Sept. 24. Students and their parents must fill out this form to be considered for federal, state and school-based aid, as well as federal student loans.
How do I get started?
Your first step to complete and submit the FAFSA is to head to studentaid.gov. Before getting started, gather parents’ and students’ Social Security numbers, 2024 tax returns and bank statements, among other documents. (See this FAFSA checklist.)
Set aside about 30 minutes to complete the form. A new development for this year’s form: You can invite contributors with their email address, rather than having them create their own FSA ID.
Remember that you must fill out the FAFSA every year to qualify for aid and loans.
What’s my deadline?
For the 2026-2027 school year, the federal deadline is June 30, 2027. But — and this is significant — submit it as soon as you can. Individual states and schools may set their own deadlines earlier.
Also, some aid is given on a first-come first-serve basis, so applying early gives you the best chance of claiming that free money. See more about FAFSA deadlines.
Note that there’s still time to submit the FAFSA for the current 2025-2026 school year. You have until June 30, 2026, but if you haven't done it yet, prioritize it now.
The One Big, Beautiful Bill Act will impact borrowers
On July 4, 2025, President Donald Trump’s One Big, Beautiful Bill was signed into law. It will majorly affect many consumers’ finances — including their student loans. You can find in-depth info on the One Big, Beautiful Bill Act here, but here's a quick overview.
How big of a deal is this?
As the president might say, huge. Current and future borrowers will be affected in many ways.
Grad PLUS loans: PLUS loans for graduate and professional students will go away, and new graduate school borrowers will be subject to borrowing caps.
Parent PLUS loans: Parent PLUS loans will also be eliminated, and new parent loans will be capped. Current Parent PLUS borrowers need to take action by July 1, 2026, including consolidating their loans and switching repayment plans, in order to remain eligible for forgiveness.
Income-Based Repayment plan changes: "Partial financial hardship” will be removed as an IBR requirement. If you've had an IBR application denied because you lacked “partial financial hardships,” you can reapply. Though that information is still on the IBR application, lacking financial hardship is no longer grounds for denial. IBR is the only existing IDR plan that will remain available to current borrowers after July 2028, so it's likely that many borrowers will want to switch to IBR.
Other repayment plan changes: ICR and PAYE will sunset by July 2028, and IBR will only be an option for current borrowers who do not take out any new loans after July 1, 2026. New borrowers and existing borrowers taking out new loans after that date will choose between two repayment plans: A modified version of the standard repayment plan, with the term based on the loan balance, and the new Repayment Assistance Plan, which will require 30 years' worth of payments before loan forgiveness.
Limits to forbearance and deferment: Borrowers taking out new federal student loans after July 1, 2027 will face stricter guidelines for forbearance and deferment. Borrowers will no longer be able to qualify for a loan deferment because of unemployment or economic hardship.
Do I need to act now?
The good news is that none of these changes are happening immediately. Most will go into effect sometime between July 1, 2026 and July 1, 2028. The only federal student loan borrowers with an action item are Parent PLUS borrowers whose loans are not consolidated; if that's you, you'll want to submit a consolidation application ASAP to maintain access to IDR plans and forgiveness.
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