The Department of Education had announced loan forgiveness for more than 21,200 borrowers.
According to new court documents, the loan forgiveness falls under income-based repayment plans.
However, this relief is short-lived as sweeping changes to the student loan system come into effect.
March discharges will be made up of 800 PAYE borrowers, 9,900 ICR borrowers and 10,500 IBR borrowers. All income-driven discharges are being processed, except those under the SAVE plan. The SAVE program will be discontinued as soon as possible.
But borrowers who get forgiveness in 2026 will have to navigate new changes.
Student loan forgiveness is now taxable again. When the American Rescue Plan Act tax break expired on December 31, 2025, Congress refused to extend it.
This means that no matter whether the portion of the loan is forgiven or canceled, the IRS still treats that forgiven amount as taxable income.
The authorities decide to exempt those who met their payment milestone before January 1, 2026.
Under the new changes, the SAVE plan is ending and borrowers who were enrolled in it have a deadline of July to switch to another plan.
Those who do not make the change will be automatically placed on a Standard plan.
Starting in July, the new Payment Assistance Plan (RAP) will come into force, which will allow lower payments each month, as well as interest bonuses. However, the borrower must make payments for at least 30 years before obtaining any forgiveness, which is more than double the 20 to 25 years currently required by existing programs.
Students who have taken out a loan from July onwards are no longer eligible for the PAYE, ICR and IBR programmes. Instead, your only option would be RAP.
The scenario is not much different for the approximately 2 million students who are about to graduate this spring. The grace period remains the same at six months.
