In response to former President Joe Biden's attempted mass cancellation of student loan debt, the Trump administration paused most student loan debt relief programs for review, which predictably prompted multiple lawsuits to block that move.

One such lawsuit was just ended on Friday with a settlement in which the administration agreed to reverse the pause and resume processing applications for debt relief under certain specific programs, according to the New York Post.

That means upwards of 2.5 million borrowers could potentially see their debt forgiven, albeit only within a relatively brief window, as two of the restarted programs are slated by law to be phased out in mid-2028.

Settlement reached to end lawsuit

According to CNBC, a Washington D.C. district court approved on Friday a proposed settlement to end litigation between the Department of Education and the American Federation of Teachers labor union, which sued the administration in March to end the pause on student loan debt relief programs.

Per the terms of the settlement, the government agreed to resume accepting and processing applications for two income-based debt relief programs -- the Income-Contingent Repayment plan and the Pay as You Earn plan -- so long as those programs remain in effect.

Notably, however, both of those programs are set to expire on July 1, 2028, as a result of the Trump agenda bill passed by Congress earlier this year.

According to the settlement's terms, the Trump administration has also agreed to resume accepting and processing applications for student loan debt relief under the Public Service Loan Forgiveness program, as well as to not collect taxes on any eligible relief for debt discharged before the end of 2025.

Further, the government was ordered to provide the court with six status reports every 30 days, with the first report due 30 days after the current government shutdown ends and funding for normal operations is properly appropriated.

Biden's illegal mass cancellation prompted pause for review

The impetus for the Trump administration's pause on most student loan debt relief forgiveness programs was a disputed interpretation of a court order that paused former President Biden's ill-fated Saving on a Valuable Education, or SAVE, plan.

Consumer advocates complained that the pause left available to borrowers only one income-based repayment plan, and the teachers' union sued on the argument that the pause unfairly and illegally blocked debt holders from seeking relief through programs that existed at the time they first took out the loan.

Now, with at least some of the debt relief programs resuming, it is estimated that around 2.5 million borrowers will once again be eligible to apply for cancellation of their remaining student loan debt.

Both sides comment on the agreement

The Post reported that Winston Berkman-Breen, the legal director for the group that represented the AFT in the lawsuit, said in a statement on the settlement, "This is a tremendous win for borrowers. With today’s filing, borrowers can rest a little easier."

"The U.S. Department of Education has agreed to follow the law and deliver Congressionally mandated affordable payments and debt relief to hard-working public service workers across the country, and will do so under court supervision. We fully intend to hold them to their word.

An unnamed spokesperson for the Department of Education told the Post, "The Biden Administration’s illegal attempts at mass student loan forgiveness impacted all of the Department’s income-driven repayment programs, including Income-Based Repayment."

"The courts intervened to stop their illegal efforts, but that also impacted Department systems and prevented us from processing lawful loan discharges,” they added. "Thanks to the Trump Administration’s efforts to separate out the illegal loan cancellation schemes, we are able to process legitimate loan cancellations once again."