It may not sound like it, but it's a win-win situation as the Trump administration reaches an agreement with the American Federation of Teachers (AFT) to accelerate the closing of a number of student loans to people who've been paying on them, in some cases for decades.
The American Federation of Teachers President Randi Weingarten, however, is bragging about the settlement in this case as if it were a big win for the AFT when in actuality it's an agreement that benefits the Trump administration as well.
"This has nothing to do with 'forgiveness' such as they were trying to do in the [Biden} administration that got struck down by the courts," says Chip Lupo, an analyst at Wallethub.
These loans are being wiped out after the recipients completed special community service-type programs in exchange for early payoffs and most have been paying for many years.
"If you agree to work in a certain sector for X number of years, they cancel out part of your student loan as payment for that," Lupo explains.
To clear up a lawsuit called AFT v. U.S. Department of Education, a court agreed to wipe out the student loans under "income-driven repayment programs," which are nothing like the scheme attempted by the Biden administration that, in fact, blocked attempts to end student loans in which the borrowers were owed relief.
Some student loan borrowers are offered early payoffs if they'll agree to, for instance, work in rural hospitals for a certain amount of time in exchange for an early loan termination before the entire balance is paid off.
The Biden administration, however, was "illegally" attempting "mass student loan forgiveness," which impacted all of the Department’s more specialized programs such as these income-driven programs, according to a Department of Education spokesperson. The Biden program was terminated by court order.
In this, the AFT v U.S. Department of Education case, those who worked special projects in exchange for early termination of loans were promised their loans would be wiped out in 2025 and taxes on the forgiven loans would not apply.
The court's decision in this case fulfills those promises.
The agreement between the AFT and the administration will have to be approved by the court before it's official.