Loan relief has resumed for many Americans, providing a significant opportunity for former students who were previously left in uncertainty. The program, which had been paused in July, is now moving forward, allowing borrowers to benefit from the Income-Based Repayment (IBR) plan. This program offers loan cancellation after 20 or 25 years of qualifying payments.
However, a looming deadline is approaching, requiring eligible borrowers to make decisions quickly. The opt-out deadline for this relief is set for October 21, 2025, and those who fail to act by then may miss out on this important financial opportunity.
Loan Relief Resumes After Suspension in July
In July, the government halted discharges under the Income-Based Repayment (IBR) program due to ongoing system updates and legal challenges related to other income-driven repayment (IDR) plans.
This pause left many borrowers in uncertainty, particularly public service workers such as teachers and nurses, who were most affected by the freeze. Public outcry led to the American Federation of Teachers (AFT) filing a lawsuit against the Department of Education, arguing that the suspension was unlawful.
This legal pressure, combined with public demands, resulted in the administration reversing its course earlier this month, resuming loan relief for qualifying borrowers.
The Department of Education began notifying eligible borrowers by email, letting them know that they have met the necessary payment threshold to qualify for student loan forgiveness. The subject line of these emails reads:
You’re eligible to have your student loan(s) discharged.
This marks a significant step forward for many borrowers who have been struggling with student debt for decades.
You’re eligible to have your student loan(s) discharged – said the subject line of the emails,
read by Business Insider.
Your loan servicer will notify you if and when your IBR discharge has been processed – the email said,
per the outlet.
It may take some time for your loan servicer to process your discharge and for your account to reflect this change. Most borrowers will have their discharge processed within two weeks, but for some borrowers, processing could take more time.
Key Dates and the October 21 Opt-Out Deadline
For borrowers who qualify, the next crucial date is October 21, 2025, when the opt-out deadline will close. After this date, loan servicers will begin processing the discharges, which are expected to be completed within weeks. While the majority of borrowers will see their loan balances canceled within two weeks, some may experience delays.
The processing time will depend on the specifics of each borrower’s situation, as noted in emails sent by the Department of Education, which also stated that
It may take some time for your loan servicer to process your discharge and for your account to reflect this change.
As mentioned by the US Sun, borrowers should carefully evaluate their options before opting out. If they choose to decline the loan relief, they will still be responsible for continuing to make payments. Some borrowers might be hesitant to accept the forgiveness because of the tax consequences. In certain states, the forgiven debt could be treated as taxable income, leading to potential tax liabilities. This is a critical point for those considering opting out, as the financial implications could be significant in the long term.
