5 Big Updates on Student Loan Forgiveness to Start 2025

As the Biden administration winds down and Donald Trump prepares to return to the White House, the federal student loan system is more chaotic than ever. While millions of borrowers have received student loan forgiveness under Biden administration initiatives, others appear to be stuck.

To make matters even more frustrating, the landscape for borrowers seems to be constantly changing. In addition to programs ending or changing, many borrowers could see big increases in their monthly payments this year. And it doesn’t look like the turbulent environment will improve anytime soon.

Here are the biggest updates on student loan forgiveness going into 2025 and what borrowers should watch out for this year.

Latest batch of student loan forgiveness approved under PSLF

Last month, the Biden administration announced that an additional 55,000 borrowers would receive student loan forgiveness through the PSLF program. Public Service Loan Forgiveness can wipe out federal student debt for borrowers who work for nonprofit organizations or public employers for at least 10 years while complying with other rules of the program.

When Joe Biden first took office four years ago, fewer than 10,000 people had been approved for student loan forgiveness under PSLF. But the administration took a number of steps to improve the program through a combination of executive actions and legislative updates. The results have been profound, with more than one million borrowers now receiving student loan forgiveness through PSLF, according to the latest data from the Department of Education.

The future of PSLF is uncertain, and there have been calls from some Republicans to eliminate it. Full repeal of the PSLF would require an act of Congress, however, and it is too early to know whether a repeal can be accomplished even with full Republican control of the House, Senate, and presidency. A previous PSLF repeal proposal during the first Trump administration never gained traction, and would have grandfathered current borrowers.

Two IDR plans reopen as student loan forgiveness remains blocked for SAVE plan

But while the PSLF program has been a bright spot for the Biden administration, other key student debt relief initiatives appear to be failing. The SAVE plan is one of them. Once touted as the most affordable income-driven repayment plan ever created — with low payments, interest subsidies and numerous paths to eventual student loan forgiveness — the program is now mired in legal challenges. A ruling issued by a federal appeals court last summer blocked the SAVE plan, and it remains in effect today. It looks increasingly likely that the program will eventually be struck down by the courts or, failing that, be rescinded by the incoming Trump administration.

Millions of borrowers have been forced into forbearance as a result of the court order, which has halted their progress toward student loan forgiveness. To give borrowers more options to get back on track, the Biden administration reopened Pay As You Earn and income-based repayment plans in December. PAYE and ICR were sunsetted as part of the implementation of the SAVE plan. Reopening these plans gives borrowers more opportunities to return to IDR so they can resume progress toward student loan forgiveness through both IDR plans as well as PSLF. However, student loan forgiveness at the end of a 20- or 25-year term remains blocked for both PAYE and ICR due to legal challenges to the SAVE plan.

Biden withdraws two other student loan forgiveness plans

Meanwhile, the Biden administration withdrew plans to pass two other mass student loan forgiveness initiatives. One, called “Plan B” because it was effectively a backup option to Biden’s first plan, which was struck down by the Supreme Court, could have benefited up to 30 million borrowers. “Plan B” student loan forgiveness targeted borrowers whose balances had ballooned due to interest accruals and people who first entered repayment at least two decades ago. The administration also unveiled a separate program that would have granted student loan forgiveness to people based on hardship.

But “Plan B” remained mired in its own legal challenge, while hardship-based student loan forgiveness could not have been implemented until Trump takes office. To prevent the establishment of adverse legal precedent, and to prevent the Trump administration from tinkering with program rules in ways that could potentially harm borrowers, the Biden administration chose to withdraw the proposed rules for the two plans in December. This definitely means that these loan forgiveness programs will not happen.

The Department of Education is pausing student loan forgiveness processing for the TPD program

As part of a long-planned overhaul of the federal student loan system, the Department of Education announced that student loan forgiveness under the Total and Permanent Discharge, or TPD, Discharge program would be temporarily suspended for several months beginning in late December. The TPD Discharge program can eliminate federal student loan debt for borrowers who are unable to participate in significant gainful activity due to a disabling medical impairment.

The department is transferring several loan forgiveness and discharge programs from outside third-party service providers to StudentAid.gov so borrowers can work through a single web portal for more student loan-related questions rather than a patchwork of contractors. The PSLF program underwent a similar transition last year.

According to the Department of Education, borrowers can still submit TPD discharge applications during the transition. However, the borrowers should not expect to receive decisions until after the inspection has been completed, which is expected to happen in the spring.

Repeal of student loan forgiveness for IDR plans is proposed by House Republicans

As Republicans plan to take full control of Washington, the first item on their agenda will be to pass a reconciliation bill. The budget vote process allows lawmakers to push through budget-related legislation and bypass the Senate filibuster, which would require 60 votes.

Republican lawmakers are still figuring out what will be included in the first reconciliation package, though most expect the bill to be primarily focused on extending or expanding the 2017-era tax cuts, at a minimum. However, some Republican House leaders are pushing for student loan reforms to be included in the bill as well. Such a proposal would eliminate time-based student loan forgiveness under IDR plans and replace it with another IDR plan that only forgives a borrower’s balance after a certain amount is repaid. The bill would also toughen several Biden administration rules for student loan forgiveness (such as for borrower defense for the repayment program) and curtail the Department of Education’s authority to enact student loan forgiveness outside of strict authorizations. Some lawmakers are also calling for the education department to be abolished entirely.

It is far from clear at this time whether any of these elements, including the repeal of student loan forgiveness, will be included in the ballot proposal. But borrowers should keep an eye on that – and we’ll probably know more by March.