Student Loan Forgiveness Was Paused Most of 2025—But Thousands Still Got Their Debt Wiped. Here’s How They Did It

While the official student loan forgiveness machinery ground to a halt for most of 2025, a quiet bypass route stayed open—and thousands of borrowers found it.

The Loophole That Didn't Close

Federal programs like Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) account adjustments hit a bureaucratic wall. The pause left millions in limbo, watching their financial futures get stuck in a holding pattern. Yet, a specific subset of borrowers—those who had already crossed critical thresholds for payment counts or who qualified under narrower, existing statutes—slipped through.

Forgiveness by Technicality

The system didn't stop; it just got pickier. Servicers continued processing applications that were already in the pipeline or that met strict, pre-pause criteria. Think of it as a financial airlock: if you were already inside when the door sealed, you could still make it to the other side. For everyone else? The waiting room just got more crowded.

The Cynical Take

It's a classic move: announce a broad freeze to manage the political optics, while letting a trickle of approved cases through to avoid total system collapse. A neat way to claim fiscal restraint while quietly maintaining a debt-relief drip feed. In traditional finance, they call that 'managing expectations.' Everyone else calls it hoping for a miracle while the fine print does its work.

The path to student debt freedom didn't vanish—it just became a single-file line for the lucky few who knew where to stand.

KEY TAKEAWAYS

• During President Donald Trump's first year of his second term, the Department of Education forgave the loans of an estimated 117,280 borrowers through the Public Service Loan Forgiveness program.
• As lawsuits led to a pause in forgiveness under several income-driven repayment plans, 3,570 borrowers received forgiveness through those plans in 2025.
• While the number of forgiven borrowers is lower than during Joe Biden's presidency, it is much higher than other previous administrations.

Investopedia Answers

Although federal student loan borrowers faced many changes to their repayment plans during President Donald Trump's first year of his second term, thousands still got their debt forgiven last year.

Borrowers faced a pause in forgiveness on income-based repayment plans, a reworking of the Public Service Student Loan Forgiveness program, and an overhaul of the entire repayment system last year. Despite the changes, roughly 121,000 received forgiveness in 2025.

While that number may be smaller than the sweeping forgiveness of Trump's predecessor, it's still far more than historical numbers.

Why This Matters

Paying back student loans cuts into many borrowers' budgets, with more borrowers cutting back on spending to make their payments. Many rely on forgiveness programs to help them divert their money to other responsibilities, such as savings and caring for family.

Public Service Loan Forgiveness

Investopedia estimates that in 2025, the Department of Education forgave the loans of about 117,280 borrowers through the Public Service Loan Forgiveness program, also known as PSLF. The program forgives public service workers' loans after 10 years of payments.

Investopedia calculated the amount of student loan forgiveness granted last year using publicly available data from the Department of Education and court filings in two cases that involved the federal student loan program.

In comparison, former President Joe Biden's administration forgave an average of 267,500 borrowers' loans under PSLF each year of his term, totaling nearly 1.07 million. This was an unprecedented amount of forgiveness, as prior to Biden, only about 7,000 borrowers had their loans discharged in the program's history.

Income-Based Repayment Plans

The TRUMP administration also forgave about 3,570 borrowers' loans through the Income-Based Repayment plan.

There are three income-driven repayment plans that allow borrowers to receive forgiveness after a designated number of payments: the Income-Contingent Repayment, Pay As You Earn, and Income-Based Repayment. Since payments vary based on borrowers' income under these plans, borrowers who make payments for 20 or 25 years and still have a balance will have the remaining balance forgiven.

For most of 2025, the Department of Education did not forgive loans under income-driven repayment plans because of a lawsuit challenging the plans' legality. Early in 2025, the Department of Education paused forgiveness for the ICR and PAYE plans, and in July, it announced it had also paused forgiveness for the IBR plan.

The Education Department does not have publicly available data on the number of borrowers who received forgiveness through an income-driven repayment plan from any administration. When asked for this information, the Department of Education referred Investopedia to loan forgiveness reports that did not include income-driven repayment forgiveness.

What is known is that the Department of Education resumed income-driven repayment plan forgiveness in October and that at least 3,570 borrowers received forgiveness through the IBR plan from Nov. 1 to Dec. 31, 2025. So far, no borrowers have received forgiveness through the ICR or PAYE plans.

RELATED EDUCATION

Prior to the Biden administration, only 50 borrowers received forgiveness through an income-driven repayment plan, according to Protect Borrowers, a borrowers' advocacy organization. The Department of Education under Biden said it forgave about 1.04 million borrowers through income-driven plans, averaging almost 260,000 per year.

For comparison, the Trump administration forgave less than 1.4% of that average in 2025.

Important

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