Student Loans

Income-driven forgiveness

The balance left at the end of an income-driven plan's horizon: twenty years on IBR or PAYE, twenty-five on old IBR or ICR, thirty on RAP.

What it takes

  • Reaching the plan's qualifying payment count. On RAP that is 360 payments over at least thirty years.
  • Staying on a qualifying plan throughout. Switching into RAP from another income-driven plan carries the payments across and stretches the horizon to thirty years.

What it does not cover

  • Payments made under RAP do not count back towards IBR, ICR or PAYE unless the RAP payment was at least the ten-year Standard amount for that month.
  • The Department gives 21 days to opt out once it identifies a loan as eligible for discharge, which matters because of the tax.

Taxable as income from 2026

The exclusion that made this tax-free expired on 31 December 2025 and was not extended. A balance discharged from 2026 is federal taxable income in the year it is discharged. A borrower who reached the milestone before 2026 but whose discharge is processed later is still covered by the old exclusion.

State treatment is separate and this site does not guess at it. Check your state.

Sources

  1. Public Service Loan Forgiveness, U.S. Department of Education. Checked on . Backs the 120 qualifying payments and which plans qualify; that Tiered Standard payments do not qualify; the qualifying and non-qualifying employer categories; that the vacated employer rule has no effect.
  2. Teacher Loan Forgiveness, U.S. Department of Education. Checked on . Backs the $17,500 and $5,000 amounts and who each applies to; the five complete and consecutive years requirement; that the same service cannot count towards PSLF.
  3. Total and Permanent Disability discharge, U.S. Department of Education. Checked on . Backs the three qualification routes; the automatic discharge through quarterly data matches; the three-year monitoring period and that a VA-based discharge has none.
  4. Closed School discharge, U.S. Department of Education. Checked on . Backs the 180-day window and the automatic discharge one year after closure; the refund of payments and deletion of adverse credit history.
  5. Court actions affecting income-driven repayment, U.S. Department of Education. Checked on . Backs that the tax exclusion covered discharges from 1 January 2021 to 31 December 2025; that a milestone reached before 2026 remains covered if the discharge is processed later.

Checked on .