The Department of Education announced it will resume processing loan forgiveness for millions of student borrowers after months of uncertainty caused by a court ruling that halted repayment programs earlier this year, as reported by The New York Post.

The White House confirmed that the Trump administration will restart loan forgiveness for borrowers enrolled in two income-driven repayment programs that had been paused following litigation over a previous Biden-era plan.

“Quite frankly, this is huge,” said Erica Sandberg, consumer finance expert at BadCredit.org, in an interview with The Post.

“It will take millions of borrowers out of limbo.”

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In February, an appeals court upheld a ruling that blocked the SAVE repayment program introduced during the Biden administration, placing loans for roughly 8 million Americans in forbearance.

President Trump’s Education Department argued that the ruling applied to other income-driven repayment programs, such as Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE), temporarily suspending both.

The American Federation of Teachers, representing about 1.8 million members across education, healthcare, and public service sectors, filed a lawsuit seeking to restart debt cancellation for those affected.

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More than 13 million Americans use income-driven repayment (IDR) plans, which adjust monthly payments to a percentage of discretionary income — typically between 10% and 15%.

These programs cancel remaining student loan debt after 20 or 25 years, depending on the borrower’s plan. There is no income cap, making these options widely used among low- and middle-income earners.

Under the GOP’s “big, beautiful” tax and spending bill, the Trump administration plans to phase out both the ICR and PAYE programs by July 1, 2028. Together, those programs currently have more than 2.5 million participants, according to higher education experts.

The administration’s replacement, called the Repayment Assistance Plan, will begin in July 2026. It will calculate monthly payments based on 1% to 10% of a borrower’s discretionary income, depending on earnings.

Unlike previous programs, the plan does not include a payment cap, meaning some borrowers could pay a larger portion of their income than before.

A report from the Student Borrower Protection Center warned earlier this year that a typical borrower could see monthly payments rise by several hundred dollars under the new system.

Sandberg noted that under President Trump’s plan, borrowers will be able to request cancellation of any remaining balance after 30 years.

“As a borrower, the highest payments will be through the standard 10-year plan,” she said, explaining that the standard plan — which offers fixed monthly payments over 10 to 25 years — does not include debt cancellation, as loans are paid in full.

The Department of Education said the transition will be gradual, with current enrollees in paused programs receiving updates before new repayment terms take effect in 2026.