Education Department forgives 21,200 student loans in March as repayment changes near
Roughly 21,200 borrowers had their federal student loans forgiven in March through income-driven repayment plans, according to a status report the Education Department filed in court last week—a sign that discharge processing is continuing for eligible borrowers.
The data, which the department said were rounded to the nearest 100, indicate officials are following through on assurances to resume discharges under three income-driven plans. These plans tie monthly payments to income and family size and can cancel any remaining balance after 20 or 25 years, depending on the program.
The department’s filing reiterates that discharges are being processed for borrowers in the Income-Based Repayment (IBR), Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans; the SAVE plan remains excluded. The Trump administration instituted a systemwide suspension of income-driven discharges last year, citing court rulings in litigation over the future of the SAVE plan.
A legal challenge to that pause prompted the department to restart processing for qualifying borrowers in IBR, PAYE and ICR. Agency guidance notes, “We resumed processing discharges for the IBR Plan in September 2025,” and that systems have been updated to resume discharges for borrowers enrolled in PAYE and ICR.
Officials have said they are running discharge cycles for income-driven plans roughly every two months. As a result, no borrowers were forgiven under these plans in February, according to the previous status report. The last batch before March appears to have occurred in December, when 3,400 borrowers received discharges, prior court filings show.
A key change for borrowers this year: student loan forgiveness under income-driven plans is again treated as taxable at the federal level. The American Rescue Plan Act of 2021 temporarily exempted most discharges from federal income tax through the end of last year.
Congress and President Trump declined to extend that relief in the One Big, Beautiful Bill Act enacted in 2025, returning IDR discharges to taxable status. “Debt discharged under an IDR plan could create a federal tax liability for you, depending on the effective date of the discharge,” the department’s March guidance states.
The latest filing underscores continued processing for IBR, PAYE and ICR even as the federal student loan system undergoes significant changes in the coming weeks and months. The department has signaled it will keep updating guidance as the landscape evolves.