Strategies to Get Student Loan Forgiveness After 25 Years

One of the concerns that many student loan borrowers have is the fact that they might never pay down their Direct Loans.

However, there are various ways to obtain forgiveness on your federal student loans, depending on the program you use and how you qualify. If you qualify for lower monthly payments through income-driven repayment (IDR), you might be able to see loan forgiveness after 25 years.

Here’s what you need to know about getting student loan forgiveness after 25 years.

What is student loan forgiveness and how does it work?

When you have student loan debt, it can feel like the monthly payments are too much. This is where IDR plans come in. These plans take a look at your family size and discretionary income to set a lower monthly payment. To date, there are four main IDR plans, and when you reach the end of the repayment period, any remaining loan balance is forgiven.

There are three IDR plans that offer student loan forgiveness after 25 years:

• Income-Based Repayment (IBR). Forgiveness after 25 years applies to those who aren’t new borrowers on or after July 1, 2014.
• Income-Contingent Repayment (ICR). This is the only IDR plan available to Parent PLUS Loan borrowers.
• Saving on a Valuable Education (SAVE). Formerly called REPAYE, forgiveness after 25 years (10 years if you owe less than $12,000).

To be eligible for an IDR plan, you can’t have had an outstanding balance on a FFEL loan or Direct Loan prior to receiving a loan on or after October 1, 2007. A Direct Consolidation Loan can also be forgiven, depending on the IDR plan you have.

Your ongoing eligibility is based on receiving an annual certification that you still meet the requirements to have reduced monthly student loan payments.

When receiving IDR forgiveness, your qualifying payments are considered. Student loan repayment made while under the standard repayment plan generally counts toward the 25 years, even after you switch to an IDR plan. You can also switch IDR plans without needing to “reset” the 25-year counter. However, months spent in deferment and forbearance don’t generally count.

However, it’s important to note that the U.S. Department of Education points out that under the current COVID-related payment pause, these paused payments are considered qualifying payments for the IDR student loan forgiveness program. President Biden has extended the pause again and might be expected to extend it again.

Forgiveness is supposed to be automatic, but it’s a good idea to pay attention to your account in order to make sure that you’re on track for forgiveness based on your loan type and IDR plan, especially in light of the information revealed by NPR that loan servicers have been improperly reporting payments on education loans for years.

How to get student loan forgiveness after 25 years

If you’re on an IDR plan instead of the 10-year standard repayment plan, it’s important to meet the eligibility requirements and prepare for what happens if you actually receive cancellation. Realize that private student loans aren’t eligible for IDR or loan forgiveness. You need to look into other repayment options if you have private loans.

Apply for the correct IDR plan

First of all, you need to speak with your federal loan servicer about getting on IDR. You might need to apply separately through the federal student aid website.

Once you’ve applied for the plan and are accepted, you'll make smaller monthly payments. It’s important to note that being on IDR doesn’t change your interest rate.

Re-certify each year

You must fill out a recertification form each year to meet the eligibility requirements to remain on IDR.

Keep making your monthly payments

In order to qualify for loan forgiveness, you need to make sure you’re making payments under your current payment plan. Only qualifying payments will help you reach that 25-year forgiveness mark.

Prepare for potential taxes

In general, the IRS views debt forgiveness as taxable income and you report it on your tax return. This applies to student loan debt forgiveness under IDR.

The main exception is that loans discharged between December 31, 2020, and January 1, 2026, won’t be taxed as income. This temporary relief could be made permanent, but, for now, if your loans are scheduled for forgiveness under this repayment program beyond the end of 2025, you might need to save up or find another way to prepare for a potential tax bill.

Alternatives to 25-year forgiveness

You might not have to wait for student loan forgiveness after 25 years. Depending on your situation, you might be able to qualify for another loan forgiveness program.

• Public Service Loan Forgiveness (PSLF) program: If you have qualifying employment with a nonprofit or government entity and have made 120 qualifying payments under IDR, you can receive PSLF and have your remaining balance forgiven much sooner.
• Teacher Loan Forgiveness: The Teacher Loan Forgiveness program can help you pay off up to $17,500 if you work as a teacher in an area of need for five years.
• Healthcare professions: There are state and federal student loan forgiveness programs for healthcare providers who work in underserved areas for at least two years.
• Law school loan forgiveness: State and federal programs, such as the John R. Justice Program, exists to help public interest lawyers receive loan cancellation. See more loan forgiveness programs for lawyers.
• Perkins Loan cancelation: If you have a Perkins Loan, there are certain professions that qualify for forgiveness from your lender after you meet certain requirements.
• Student loan refinancing: If you don’t qualify for any sort of forgiveness, and earn too much for an IDR plan, you might consider refinancing your student loans. Refinancing federal loans into private loans results in being ineligible for forgiveness or IDR later. You can also refinance private student loans while keeping your federal education loans separately to help you pay off your student debt faster.

Getting student loan forgiveness relief

If you’re struggling with your monthly payment amount or trying to figure out whether the income-based repayment options are right for you, get help from our team of certified student loan experts.

You can sign up for a student debt consult with Student Loan Planner to learn about your options from the federal government as well as private sources.