‘Morning Maria’s Panel meets a new warning that studies that Gen Z is facing low credit scores with scrutiny and growing concerns about employment.
In a significant win for student loan lenders, the Trump administration has approved a court-ordered plan that will speed up repayment plans under debt-driven loan repayment programs and protect borrowers from unexpected tax bills next year.
Management and the American Federation of Testers (AFT) reached a settlement Friday in AFT v.
The AFT said in a statement that the deal – now awaiting court approval – requires the Department of Education to follow through on debt forgiveness to eligible creditors by 2025 and ensure they won’t face surprise tax delays due to bureaucratic delays.
“For nearly ten years, the AFT has fought for the rights of student loan borrowers to be freed from unfair debt shacks – and today, it is impressive that the fight is available for this program. “This year, we took on the Trump administration when they refused to follow the law and were denied the lenders who received the help they received.
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The Trump administration and the American Federation of Teachers reach an agreement to cancel student loans from millions of lenders. (Kent Nishimura / Los Angeles Times via Getty Images)
“Our agreement means that those lenders stuck in Limbo can get immediate relief or finally see the light at the end of the tunnel. “The AFT will hold the Federal Government to its Word, and we will not stop fighting until college is affordable and student loan relief does not return millions of Americans to a corrupt and exploitative debt cycle.”
According to the filing, the administration must cancel student loans from all eligible lenders enrolled in the income-paying, income-paying, and loan-forgiveness (PSLF) programs. Lenders who make payments after qualifying for cancellation will be reimbursed.
The Ministry of Education must also consider the IDR and PSLF “Buyback” programs, including those from lenders who are no longer required to demonstrate financial difficulties. Borrowers whose loans are canceled on or before December 31, 2025, will not receive IRS forms that treat the amounts forgiven as taxable income.
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The Trump administration has agreed to respond to student loan defaults in court to protect lenders from facing 2025 tax penalties. (Saul Loeb/AFP via Getty Images/Getty Images)
In addition, managers must file six monthly progress reports with the court to show the speed of application processing and loan issuance, said the AFT.
This union said the agreement and called the so-called “tax bomb” coming from 2026 in a change in the tax law that will treat the debt canceled as income. Without this Agreement, the lenders whose loans should be canceled by 2025 would have been fined simply because of the government’s vencowdowwap.
“This is a huge win for lenders,” Winston Berkman-Breen, legal director of lender protection, said. “With today’s filing, lenders can rest easy knowing they won’t be hit with an unfair tax bill when their student loans are finally paid off, following the forbearance rule.
Student loan loan scores
A sign marks the entrance to the US Department of Education’s Department of Education on June 20, 2025, in Washington, DC (J. David Ake / Getty Images / Getty Images)
“The US Department of Education has agreed to pursue affordable pay and debt relief for hard-working public service workers across the country, and will do so under court supervision,” Berkman-breen said. “We absolutely intend to hold them to their word.”
Fox Business has reached out to the White House for comment.
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Several lenders filed a lawsuit in March 2025 after the administration removed IDR registration applications from Federal websites and silenced loans to stop processing them. The government later agreed to accept and handle the claims but has not publicly committed itself to denying the debt until now.
A status report on Friday’s merger is pending court approval.
