Category Credit & Debt

The U.S. Department of Education has restarted student loan forgiveness for about 2 million borrowers who have been making payments under Income-Based Repayment (IBR) plans for 20 or 25 years. These borrowers are now being told their loans will soon be wiped out. This update is especially important because, under the American Rescue Plan, any federal student loan forgiven by December 31, 2025, is tax-free. That means borrowers won’t have to pay taxes on the amount that is forgiven. However, if forgiveness happens in 2026 or later, the forgiven loan amount could be taxed like regular income. With possible changes coming under the new Trump administration, many borrowers are worried their forgiveness could be delayed and become much more costly.

In October 2025, the U.S. Department of Education announced a major step in helping Americans with student loan debt. About two million people will have their federal student loans completely forgiven as part of a review of income-driven repayment (IDR) plans. These plans were supposed to cancel student debt after 20 or 25 years of steady payments, but many borrowers were denied forgiveness due to errors and mismanagement. The government is now working to fix those mistakes. This move comes at a time when rising living costs and economic stress are major concerns for voters, especially in a big election year. Borrowers included in this forgiveness plan will start receiving official emails starting October 21, 2025.

Deciding whether to invest while you still have student debt depends on a few key factors—especially your loan’s interest rate. Financial experts generally say that if your student loan interest rate is higher than about 6%, it’s better to focus on paying off that debt first. That’s because the money you save on interest is likely more than what you’d earn from investing. However, if your interest rate is low—like 4% or less—it might make sense to start investing while making regular loan payments. For example, putting money into a 401(k), especially if there's an employer match, can help grow your retirement savings without delaying debt repayment. It’s all about balance: paying off debt while still building for the future.

In times of economic uncertainty, it’s important to make smart choices with your money. With interest rates changing and debt levels rising, you can stay ahead by taking simple steps to protect your finances. For example, if interest rates are dropping, refinancing your loans could help lower your monthly payments. Automating your savings and bills can keep you organized and help build long-term wealth without stress. Financial experts also recommend looking closely at mortgages—sometimes paying extra upfront, called “points,” can lower your interest rate and save you money over time. Watching the 10-year Treasury yield, which is closely linked to mortgage rates, can also give clues about where interest rates might be heading.

On October 9, 2025, the U.S. Department of Education restarted student loan forgiveness for about two million borrowers after a pause in the program. These borrowers are on income-based repayment (IBR) plans, which adjust monthly payments based on income and family size. Many of them have now reached the required number of qualifying payments, making them eligible to have the rest of their loans forgiven. The government is working with loan servicers to update these accounts, with most expected to be completed by early November. This move is part of a larger effort to ease the $1.6 trillion student debt crisis, though it comes during a time of political uncertainty and debate over the federal government’s role in funding higher education.

As of October 2025, the U.S. Department of Education has restarted student loan forgiveness for certain borrowers after a pause that began in July. This restart mainly helps people who have been paying off their federal student loans through a plan called Income-Based Repayment (IBR) for 20 or 25 years. These borrowers are now starting to get notices—nicknamed "golden emails"—letting them know their loans may be forgiven soon. This comes after delays caused by legal and political issues that affected other forgiveness plans, like SAVE and PAYE, which are still on hold. The government is working to move forward despite these challenges and is focusing on helping the people who qualify under IBR rules.