If you’re feeling like your student loan balance is a moving target that just won't stay still, you aren't alone. Honestly, it’s a mess. Between courtrooms in Missouri and the Department of Education in D.C., the rules seem to change every time you log into your servicer's portal.
Basically, the big student loans news today October 2025 is all about the "Great Thaw." After months of everything being frozen by legal injunctions, the gears are finally grinding again—but only for some people. If you’ve been waiting for forgiveness under older plans, there’s a light at the end of the tunnel. If you're on the newer SAVE plan? Well, it’s complicated.
The AFT Settlement: A Rare Win for Older IDR Plans
Earlier this month, a huge development flew under the radar for many. The Department of Education reached a deal with the American Federation of Teachers (AFT) to start processing forgiveness again.
Remember how everything stopped in July? Courts had blocked the SAVE plan, and in the chaos, the Department of Education paused everything related to Income-Driven Repayment (IDR). They were worried about the legal fallout. But as of mid-October 2025, they’ve agreed to resume discharges for people on these specific plans:
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- Income-Contingent Repayment (ICR)
If you’ve hit your 20 or 25 years of payments on these plans, the Department is finally moving your paperwork through. The most important part of this news? The tax deadline. Under the American Rescue Plan, federal student loan forgiveness isn’t taxed as income. But that perk expires on December 31, 2025.
The October agreement ensures that if you qualify for forgiveness before the end of this year, the IRS won't come knocking for a "tax bomb" in 2026, even if the actual paperwork doesn't clear until January. It’s a massive relief for folks who were terrified that a bureaucratic delay would cost them thousands in taxes.
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What’s Actually Happening with the SAVE Plan?
Okay, let’s talk about the elephant in the room. The SAVE plan is currently in a sort of legal purgatory.
If you are one of the 8 million people enrolled in SAVE, you’re likely in a no-interest forbearance right now. This sounds great because your balance isn't growing, but there is a catch. Usually, these months don't count toward Public Service Loan Forgiveness (PSLF).
However, October 2025 brought some clarity on the "PSLF Buyback" program. The Department of Education confirmed they are still processing these applications. If you reach your 120 payments but some of those months were spent in this weird "SAVE forbearance," you might be able to "buy back" those months later to get your forgiveness.
Why the Courts are Still Involved
The 8th Circuit Court of Appeals is still chewing on whether the SAVE plan is even legal. The states suing the government—led by Missouri—argue that the administration overstepped its bounds by making the plan too generous.
While they argue, you’re stuck. You can’t make progress on your "years to forgiveness" clock unless you switch plans. But switching plans right now is like trying to change tires on a moving car; the systems are slow, and some plans (like PAYE) are technically closed to new applicants.
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Interest Rates and the 2025-2026 Reality
If you’re a current student or looking at new loans, the numbers for the current academic year are locked in. They’re a bit lower than last year, but definitely not "cheap" by historical standards.
For loans disbursed between July 1, 2025, and June 30, 2026, here is the breakdown:
- Undergraduate Loans: 6.39%
- Graduate Unsubsidized: 7.94%
- PLUS Loans (Parents/Grads): 8.94%
It’s weird to think that 6.39% is considered a "dip," but that’s where we are. If you have private loans, you're likely seeing even higher rates unless your credit is absolutely sparkling.
The "One Big Beautiful Bill Act" (OBBBA) and Your Future
You might start hearing a lot about the One Big Beautiful Bill Act (OBBBA) this month. This is a massive piece of legislation that passed earlier in 2025, and it’s going to flip the script on student loans starting July 1, 2026.
Here’s the gist of what it changes:
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- Grad PLUS loans are going away. New graduate students won't be able to use them starting in mid-2026.
- Borrowing limits are changing. There will be a hard cap of $20,500 per year for most grad programs.
- A new plan called RAP. The "Repayment Assistance Plan" is slated to replace all current IDR plans eventually.
While these changes don't affect your student loans news today October 2025 payments, they are the reason the Department of Education is currently overhauling their entire computer system. That’s why everything feels so glitchy lately.
Public Service Loan Forgiveness (PSLF) Updates
On October 30, 2025, the Department published final regulations for PSLF that will kick in next summer. For now, the big thing to watch is your employer eligibility.
The Department has been tightening the rules on which non-profits and government contractors count. If you haven't used the PSLF Help Tool on StudentAid.gov lately, you should probably do that this week. Don't assume your job still qualifies just because it did two years ago.
Actionable Steps for Borrowers This Month
Stop waiting for a "magic wand" to fix everything. The legal battles could drag on for years. Here is what you actually need to do right now:
- Check your "Discharge Date": If you are on IBR or PAYE and think you’re at the 20/25 year mark, call your servicer. Ensure they have your correct "effective date" on file before December 31 to avoid that 2026 tax bill.
- The 60-Day Strategy: If you're trying to leave the SAVE plan because you want your payments to count toward PSLF, apply for a plan change on StudentAid.gov. You’ll likely get a 60-day administrative forbearance while they process it, which does sometimes count toward your requirements depending on the specific transition rules.
- Document Everything: I'm serious. Download your payment history today. With the system overhauls happening for the OBBBA transition, records are getting "lost" or miscalculated at an alarming rate.
- Recertify Your Income: Most people have had their recertification dates pushed back to 2026, but check your portal anyway. If your income dropped recently, recertifying early could actually lower your payment once the forbearances end.
The reality of student loans in late 2025 is that nobody is coming to save the day with a single announcement. It’s a game of inches, and staying informed is the only way to make sure you don't pay more than you absolutely have to.