US Secretary of Education Linda McMahon speaks during the daily briefing in the Brady Briefing Room of the White House in Washington, DC, on November 20, 2025. The Education Department appears to have resumed processing student loan forgiveness under IDR plans for qualifying borrowers. (Photo by Brendan SMIALOWSKI / AFP) (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)
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The Department of Education appears to have resumed processing student loan forgiveness for borrowers in income-driven repayment plans, following a brief hiatus due to the government shutdown. Borrowers on Reddit have reported receiving the “golden letter” from the department on Tuesday indicating that their student loans have been approved for discharge, and practitioners have corroborated these accounts.
Student loan forgiveness processing has been a rollercoaster for borrowers. The Trump administration had suspended most, if not all, IDR loan forgiveness processing for most of this year. The Education Department then resumed processing briefly earlier this fall after a national teachers union filed a lawsuit challenging the processing suspension. But further processing was subsequently halted due to the historic government shutdown, even as the department entered into a court-approved settlement agreement requiring that discharges be timely processed for qualifying borrowers across several IDR plans.
Here are the latest developments on IDR student loan forgiveness, and what they mean for borrowers.
Student Loan Forgiveness Under IDR Plans Had Been Halted
IDR plans allow borrowers to qualify for student loan forgiveness after being in repayment under the plans for at least 20- or 25-years. Monthly payments are based on the borrower’s income and family size. There are currently four IDR plans: Income-Contingent Repayment (or ICR), Income-Based Repayment (or IBR), Pay As You Earn (PAYE), and the Saving on a Valuable Education Plan (or SAVE).
Student loan forgiveness under SAVE has been blocked since last year, after a federal appeals court enjoined the program following a legal challenge brought by Republican-led states. SAVE hasn’t technically been struck down, but it’s unlikely to return. However, the Department of Education interpreted court rulings in the SAVE plan litigation as also prohibiting any further student loan forgiveness under the ICR and PAYE plans, which were created by the Department of Education via the same legal process as the SAVE plan.
The federal appeals court that blocked SAVE made it clear that student loan forgiveness under IBR was allowable, as Congress passed separate legislation authorizing the discharge of student loans under IBR once borrowers reach the 20- or 25-year milestone. Nevertheless, the Education Department announced in July via a statement on its website that IBR loan forgiveness was “paused” while the department updated its systems to comply with the recent court orders, which prevented certain deferment and forbearance periods from counting toward eventual loan forgiveness.
That prompted the American Federation of Teachers, or AFT, to file an expanded lawsuit challenging the Education Department’s actions. The AFT argued that the department’s suspension of student loan forgiveness under IBR, ICR, and PAYE was unlawful, and that only SAVE was blocked by the federal appeals court. The AFT sought emergency relief to force the department and Secretary of Education Linda McMahon to resume processing student loan forgiveness.
Education Department Agreed To Resume Processing Student Loan Forgiveness
Following the AFT’s legal challenge, the Department of Education resumed processing student loan forgiveness under IBR, with a wave of so-called “golden letters” going out to borrowers in late September and October. The department then subsequently entered into a settlement agreement with the AFT, whereby officials agreed to resume processing student loan forgiveness under IBR, ICR, and PAYE.
“The defendants shall continue processing loan cancellations for borrowers who are eligible for cancellations under the Income-Based Repayment (’IBR’) plan,” says the court-approved agreement. “The defendants shall continue processing loan cancellations for borrowers who are eligible for cancellation under the Original Income Contingent Repayment (’ICR’) and Pay As You Earn (’PAYE’) plans as long as these plans remain in effect.” ICR and PAYE are set to get phased out under the One Big, Beautiful Bill Act, but not until 2028.
The Education Department also agreed to shield borrowers from federal tax liability associated with IDR student loan forgiveness if their discharge is delayed until 2026, as long as they reach their 20- or 25-year eligibility threshold before the end of 2025. IDR student loan forgiveness returns to being treated as a taxable event staring in January after Republican lawmakers declined to extend expiring tax relief.
“For their internal purposes, the defendants shall use only the date a borrower becomes eligible to have their loans cancelled under the IBR, Original ICR, or PAYE plans as the effective date of discharge of their loans,” reads the agreement. “It is further ORDERED that the defendants shall not file an Internal Revenue Service (“IRS”) Form 1099-C for borrowers who becomes eligible for the discharge of their loans in 2025 if the conditions in IRS Notice 2022-1 are satisfied.”
But following the settlement agreement, the Department of Education issued no further “golden letters” indicating approval for IDR student loan forgiveness. With the federal government shut down and most of the department’s staff furloughed, the loan forgiveness process had ground to a halt.
New Student Loan Forgiveness Approvals Go Out This Week
With the federal government now reopened and functioning again, the Education Department is able to resume processing IDR student loan forgiveness. And the next wave approvals just went out on Tuesday.
“OMG — I GOT THE GOLDEN EMAIL!!!” said one excited user on Reddit. “I literally am falling over in shock. FINALLY. Happiest day in eons. What a wonderful Thanksgiving surprise. I had just read that others were getting them today, and I checked my email and spam folder and nothing… Then I refreshed and THERE IT WAS! I’m at 304 on old IBR.” 25 years is the equivalent of 300 months of qualifying payments.
“The Golden Email has landed,” said another user on Reddit. “I just got the Golden Email at 1:15 am. It’s also my 51st birthday! IBR, 306 payments, never on save.”
“You are now eligible to have some or all of your federal student loan(s) discharged because you have reached the necessary number of payments under your income-driven repayment (IDR) plan,” reads the standardized text of the approval notices, which the Education Department sent directly to borrowers via email.
But it’s unclear at this time whether student loan forgiveness approvals have expanded beyond the IBR plan. Several Reddit users indicated they have more than 300 qualifying payments under the ICR plan, but have yet to receive the “golden email.”
What Borrowers Should Know About Student Loan Forgiveness Approvals
Only borrowers who have reached the 20- or 25-year threshold (240 or 300 qualifying payments, depending on the plan) will receive notices that they qualify for student loan forgiveness. And a discharge isn’t instant; the email notifies borrowers that they have a few weeks to opt out, after which the discharge would then be processed by their loan servicer.
“Most borrowers will have their discharge processed within two weeks” of the opt out date, says the notice. “But processing could take more time for some borrowers.”
Borrowers who have made payments that exceed the required number of payments to qualify for student loan forgiveness could be issued a refund of any excess payments made, and the Department of Education agreed in the settlement with the AFT to process those refunds. However, borrowers are not entitled to refunds of payments made prior to their most recent loan consolidation (if they have consolidated their student loans through the Direct consolidation program). Borrowers should also be aware that not all states will treat student loan forgiveness the same as the federal government, so even if you are shielded from federal tax liability, it’s a good idea to check with a tax advisor about possible state tax implications.
While student loan forgiveness so far seems to be limited to the IBR plan, it should soon encompass qualifying borrowers in the ICR and PAYE plans, as well, pursuant to the Department of Education’s agreement with the AFT. The Education Department also agreed to file monthly status reports with the court providing key details on the discharge status of student loans under each IDR plan. So, if forgiveness isn’t being processed for student loans enrolled in the ICR and PAYE plans, the court (and the public at large) will know soon.
