New Delhi, Oct. 21 -- The Trump administration on Friday announced a major policy shift, saying it will cancel student debt for millions of borrowers under federal loan forgiveness plans - reopening a pathway that the government had previously blocked.

This shift comes as part of an agreement with the American Federation of Teachers (AFT), under which the White House will start processing student loan forgiveness for eligible borrowers, New York Post reported.

Borrowers enrolled in two specific income-driven repayment plans, Income-Contingent Repayment and Pay as You Earn, can receive student loan forgiveness under the new policy.

These programmes calculate monthly payments based on a borrower's salary, and typically cancel any remaini...