Student loan forgiveness: Which borrowers are eligible for student loan forgiveness?
student loan
After months of uncertainty, student loan forgiveness has quietly resumed for a select group of Americans, offering a glimmer of relief for borrowers who have been waiting for debt cancellation under income-driven repayment plans.
The U.S. Department of Education temporarily paused forgiveness for Income-Based Repayment (IBR) plans in July to upgrade its systems, ensuring that qualifying monthly payments are accurately tracked. The IBR plan cancels remaining student loan debt after borrowers have completed either 240 or 300 monthly payments—roughly 20 to 25 years—depending on when the loan was taken out.
Now, updates are being finalized, and borrowers who qualify should expect their loans to be forgiven in the coming months, unless they opt out. Although the Education Department has not issued an official announcement, experts report that some borrowers have already received notifications via email in October, confirming that their loans are eligible for forgiveness.
Stacey MacPhetres, senior director of education finance at EdAssist by Bright Horizons, described the progress as a “trickle” of forgiveness. “The broader hopes of universal loan forgiveness have been dashed,” she said, highlighting that relief remains limited to certain borrowers.
How Do You Know if Your Student Loans Will Be Forgiven?
Eligible borrowers should receive an email from the Department of Education confirming their forgiveness status. MacPhetres advises borrowers to ensure their contact information is accurate with both Federal Student Aid and their loan servicers. The email also provides an option to decline forgiveness. Borrowers who wish to opt out must notify their loan servicer directly.
For those who do not opt out, discharge information will be forwarded to loan servicers after October 21, who will then process the forgiveness.
Who Qualifies for Student Debt Forgiveness?
To qualify, borrowers must be enrolled in the IBR plan and have completed either 240 or 300 monthly payments. Loans disbursed before July 1, 2014, require 300 payments, while loans taken afterward require 240.
IBR is one of four Income-Driven Repayment (IDR) plans, which adjust monthly payments based on income. The other plans—Pay As You Earn, Income-Contingent Repayment, and SAVE—count toward forgiveness only if borrowers enroll in IBR.
Could a Government Shutdown Delay Forgiveness?
The ongoing government shutdown has temporarily paused the American Federation of Teachers’ lawsuit against the Trump administration for delaying student loan forgiveness. Legal proceedings could affect the timeline for debt relief and tax implications for borrowers. Federal exemptions from taxes on forgiven debt are valid through 2025, but delays could lead to substantial tax liabilities in 2026.
Why Would a Borrower Opt Out?
Some borrowers may choose to decline forgiveness to avoid state tax liabilities, although federal tax exemptions apply through 2025. Opting out means borrowers must continue repaying their loans.
How Many Americans Are Set to Benefit?
According to experts, millions of borrowers stand to benefit, particularly those enrolled in IBR, Pay As You Earn, and Income-Contingent Repayment plans, as well as Public Service Loan Forgiveness (PSLF) programs. The White House and the Department of Education have agreed to resume processing applications and refunds for payments made after eligibility.
Consumer advocates emphasize that borrowers who secure forgiveness this year will not be taxed on the canceled debt, protecting them from the potential “tax bomb” set to take effect in 2026.
Winston Berkman-Breen, legal director for Protect Borrowers, called the resumption of student loan forgiveness “a tremendous win for borrowers” and affirmed that the government will comply with federal law to deliver mandated debt relief to public service workers and other eligible borrowers.
Q: Which borrowers are eligible for student loan forgiveness?
A: Borrowers in the IBR plan who have made 240 or 300 qualifying monthly payments, depending on the date of their loan, are eligible.
Q: How will borrowers know their loans are being forgiven?
A: Eligible borrowers should receive an email from the Department of Education, with an option to opt out of forgiveness.
Q: Can borrowers opt out of forgiveness?
A: Yes. Borrowers can decline forgiveness to avoid potential state tax liabilities, but they will continue to make payments.
Q: Will forgiven loans be taxed?
A: Student loan forgiveness is exempt from federal taxes through December 31, 2025. Some states may still tax forgiven debt.
Q: How does the government shutdown affect forgiveness?
A: Legal proceedings and administrative delays could postpone debt relief processing, potentially affecting borrowers’ taxes if forgiveness extends into 2026.
