U.S. Department of Education cancels loan forgiveness plans that affected 30 million students weeks before Trump took office: What borrowers should know

People walk past the statue of John Harvard at Harvard University, Cambridge, Massachusetts (AP Photo)

Abandoned plans: Biden administration cancels two major initiatives: The year 2024 has been tumultuous for U.S. student loan borrowers, marked by notable changes and lingering uncertainty. From the end of the long payment pause to rising interest rates, many borrowers have seen their financial difficulties worsen.
The introduction of the Saving on a Valuable Education (SAVE) plan showed promise, but its late rollout added to the frustration. Although some progress has been made, such as forgiving government officials, large-scale relief initiatives have faced obstacles, leaving millions of borrowers in limbo.

2024 — A year of high hopes and heavy burdens for student borrowers

In a surprising turn, the Biden administration abandoned two major student loan forgiveness plans last Friday. The initiatives, once a lifeline for about 30 million borrowers, aimed to combat soaring loan balances due to compound interest and offer relief to people in serious financial distress. If implemented, these plans could have significantly eased the debt burden of countless American students.
The Department of Education officially withdrew the proposed regulations, also called Notices of Proposed Rulemaking (NPRM) through notices published in the Federal Register, citing agency flexibility as the reason for its decision. The move comes just weeks before Donald Trump’s inauguration, potentially reflecting the administration’s anticipation of legal and political hurdles that could block or cancel plans.

The Department also concluded that withdrawal of the NPRM would ensure the agency has the flexibility to revisit issues and explore options and alternatives with stakeholders in the future.

In a DoE notice in the Federal Register (dt. 12/26/2024)

Although the move dashes hopes for widespread relief, officials may have strategically abandoned these initiatives to safeguard future efforts. Reversal could potentially preempt negative actions by the new administration, allowing these proposals to be revisited and refined under more favorable terms.
Read the Federal Register notice here.

What does this mean for borrowers?

While the cancellation is a blow to millions, relief is not entirely out of the question. Existing programs like Public service loan forgiveness (PSLF) and Teacher Loan Forgiveness (TLF) continue to offer lifelines.
PSLF remains a solid option for nonprofit and government employees, providing federal student loans after 10 years of qualifying payments. TLF, on the other hand, provides up to $17,500 in rebates to teachers working in low-income schools for five consecutive years.
The Biden administration also highlighted its recent successes, such as canceling $4.28 billion in debt for nearly 55,000 public workers, part of the nearly $56.5 billion erased for more than a million borrowers under income-driven repayment plans. Other initiatives have released billions for borrowers misled by schools or the permanently disabled.

Gloomy outlook, but the fight for relief continues

The end of 2024 may seem bleak for many borrowers, but it’s not the end of the road for relief efforts. The fight for broader student loan forgiveness is far from over.
Borrowers should closely monitor ongoing developments. Although mass pardon plans are not being considered at this time, other targeted relief efforts remain active. Advocacy groups are also urging the administration to expedite aid to the thousands already approved under existing programs.
For those navigating their repayment journey, resources such as income-driven repayment plans or state-specific relief programs can provide additional support. As the legal and policy landscapes evolve, staying informed will be essential to taking advantage of available opportunities.