Thousands Eligible for Student Loan Debt Cancellation

Over 40,000 borrowers could see loans forgiven under settlement

Published on Feb. 25, 2026

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More than 40,000 people could be eligible for student loan debt cancellation, according to a new court filing. Of the borrowers deemed eligible, over 10,000 were enrolled in income-based repayment plans, and another 10,000 were in income-contingent plans. Just under 10,000 were in the Pay as You Earn plan. Additionally, around 18,000 federal student loan borrowers in the Public Service Loan Forgiveness program will have their debts erased.

Why it matters

The Trump administration had largely reversed Biden-era policies that made student loan forgiveness more viable for the more than 40 million student loan borrowers in America. However, based on an October settlement with the American Federation of Teachers, hundreds of thousands will still qualify for their loans to be dismissed.

The details

The eligible borrowers were enrolled in various income-driven repayment plans, including the U.S. Department of Education's income-based repayment plan, income-contingent repayment plan, and Pay as You Earn plan. The Public Service Loan Forgiveness program also provided forgiveness for around 18,000 federal student loan borrowers who had worked for 10 years at nonprofits or the federal government.

  • The October settlement with the American Federation of Teachers led to this latest round of forgiveness.
  • The Department of Education completed over half of the reported 1.4 million pending forgiveness applications this past July.

The players

American Federation of Teachers

A labor union that sued the Trump administration last year, leading to this latest round of student loan forgiveness.

U.S. Department of Education

The federal agency responsible for administering student loan programs and forgiveness initiatives.

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What they’re saying

“I've said for a while the Trump administration would do what it could to stall forgiveness, but with lawsuits from the American Federation of Teachers and a wave of legal pressure from multiple organizations, what was already written into law is finally being enforced. This isn't generosity; it's compliance.”

— Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast (Newsweek)

“It is certainly a relief for the borrowers when loan forgiveness finally arrives. These are people who have paid back their original amounts plus above-market rates of interest. While it may seem like a financial windfall, in reality it frees up much needed funds that go right back out in spending for home purchases, retirement savings, or educating the next generation.”

— Drew Powers, Founder of Illinois-based Powers Financial Group (Newsweek)

“While it's a small portion of the 42 million Americans who have student debt, it's still a life-changing moment for those who qualify and shows a step in the right direction. After delays to income-based repayment plans and prior forgiveness efforts, borrowers are finally starting to see faster movement.”

— Alex Beene, Financial literacy instructor, University of Tennessee at Martin (Newsweek)

What’s next

Nationwide, more than 40 million Americans carry $1.6 trillion in student loan debt. The Department of Education is working to catch up on a vast backlog of forgiveness applications, with more relief potentially on the way as the legal framework continues to evolve.

The takeaway

This latest round of student loan forgiveness, while impacting a relatively small portion of the overall borrower population, represents a significant step forward in providing relief to those who have been repaying their loans under income-driven plans. However, the broader student debt crisis in the U.S. remains a complex and ongoing challenge.