Do Student Loans Go Away After 25 Years? IDR Plans and Taxes

Federal student loans can go away after 25 years, but only under specific conditions: you have to be enrolled in an income-driven repayment (IDR) plan, the loans have to be federal, and you have to have logged the required number of qualifying monthly payments. For some borrowers the finish line is actually 20 years rather than 25. And starting in 2026, whatever balance gets forgiven counts as taxable income on your federal return, which can produce a serious tax bill in the year of discharge.

Is It 25 Years or 20 Years

The forgiveness timeline depends on which IDR plan you’re on and, in some cases, when you first borrowed.

Pay As You Earn (PAYE): 20 years, or 240 qualifying payments.
Income-Based Repayment (IBR): 20 years if you first borrowed on or after July 1, 2014; 25 years if you first borrowed before that date.¹
Income-Contingent Repayment (ICR): 25 years. ICR is the only IDR option available for consolidated Parent PLUS Loans.

Payments are calculated as a percentage of your discretionary income under each plan, with the exact percentage and cap varying by plan.²

One important boundary: if you’ve been paying for 25 years on the Standard Repayment Plan, the Graduated Plan, or the Extended Plan, none of that time counts toward IDR forgiveness.³ Forgiveness is a feature of the IDR plans specifically. Time spent on any other repayment plan doesn’t produce a discharge no matter how long it runs.

The SAVE Plan Is Being Wound Down

The Saving on a Valuable Education (SAVE) Plan was blocked in court, and enrolled borrowers were placed into a general forbearance. In December 2025, the Department of Education announced a proposed settlement to end SAVE entirely, deny pending applications, and move current SAVE borrowers into other repayment plans.⁴ Time spent in the SAVE-related forbearance is set to count toward IDR forgiveness, so it shouldn’t be lost. If you were on SAVE, check with your servicer to confirm which plan you were moved to and what your forgiveness timeline looks like now.⁵

Which Loans Actually Qualify

Direct Loans are the core eligible category. That includes Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loans taken out by graduate or professional students. Direct Consolidation Loans qualify too, as long as they didn’t repay a Parent PLUS Loan.⁶

Older federal loans, meaning Federal Family Education Loans (FFEL) and Perkins Loans, can qualify, but you’ll almost always need to consolidate them into a Direct Consolidation Loan first. Private student loans never qualify. Private lenders don’t participate in federal forgiveness programs, so any private debt you carry alongside federal loans is on its own contract terms.

Parent PLUS Borrowers Are Locked Into 25 Years

If you took out a Parent PLUS Loan, you can’t enroll it directly in any IDR plan. You have to consolidate first, and even then, ICR is your only option.⁷ That means the answer for parent borrowers is 25 years, full stop. The 20-year plans specifically exclude consolidation loans that repaid a Parent PLUS.⁸

A Warning About Consolidation

Under current Department of Education rules, when you consolidate, the loan in your consolidation group with the greatest number of qualifying payments carries its count forward to the new loan. That helps loans with less history. But if you’re close to forgiveness on one loan and far from it on another, consolidating them together can effectively pull the near-finished loan back into the longer timeline. Check individual payment counts before combining loans.

What Counts as a Qualifying Payment

The clock runs on qualifying monthly payments, not on calendar time. A qualifying payment is made in full, on time, while you’re enrolled in an IDR plan. Late payments, underpayments, and months spent on a non-IDR plan don’t count.

A few features of the rule are worth knowing:

If your calculated IDR payment is $0 because your income is low enough, that $0 still counts as a qualifying month.¹
Certain deferments and forbearances count, including economic hardship deferment, cancer treatment deferment, and some administrative forbearances.⁸
Periods of default generally don’t count.

The Department of Education also ran a one-time IDR account adjustment that retroactively credited borrowers for past repayment, deferment, and forbearance periods that hadn’t previously counted. Some long-time borrowers saw their loans discharged immediately as a result. If you’ve had federal loans for many years and haven’t checked your qualifying payment count lately, log in to StudentAid.gov and look. You may be closer to the 240 or 300 payment mark than you think.²

You must also recertify your income and family size every year to stay on an IDR plan. Miss the recertification deadline and your payment can jump to the Standard Plan amount, which is easy to let happen at some point over a 20- or 25-year stretch. If you consent to automatic tax data sharing when you enroll, your servicer handles recertification without new paperwork each year.

The Tax Bill Coming in 2026

This is the part borrowers most often miss. Under the Internal Revenue Code, canceled debt is generally taxable income in the year it’s discharged.⁹ The American Rescue Plan Act made student loan forgiveness federally tax-free from 2021 through 2025, but that exclusion expired on December 31, 2025. Beginning in 2026, IDR forgiveness is once again taxable unless Congress acts.

Not all student loan forgiveness is taxable. Under 26 U.S.C. § 108(f), forgiveness tied to working in a qualifying profession for a qualifying employer is permanently excluded from income. That covers Public Service Loan Forgiveness, teacher loan forgiveness, and National Health Service Corps loan repayment, among others.¹⁰ IDR forgiveness after 20 or 25 years isn’t on that list. It’s based on time, not service, so the discharged amount is treated as ordinary income.

The size of the tax bill can be startling. Many long-term IDR borrowers see their balances grow over the years because their income-based payment doesn’t cover the accruing interest. A forgiven balance of $80,000 or more is common, and the resulting tax hit can reach five figures. Your servicer will send you a Form 1099-C reporting the canceled amount, and you’re responsible for reporting it on that year’s return.¹¹

The Insolvency Exclusion

There’s one significant escape valve. If your total liabilities exceed your total assets at the time your loans are discharged, you may qualify for the insolvency exclusion and exclude the forgiven amount from income up to the amount by which you’re insolvent. You claim it by filing IRS Form 982 with your tax return.¹² Many borrowers whose balances ballooned under IDR turn out to be insolvent at the point of discharge, but this is worth planning for in advance rather than discovering when the 1099-C arrives.

What Happens When You Actually Hit the Mark

Once you’ve made the required number of qualifying payments, the Department of Education discharges your remaining balance. For borrowers with ED-held loans that have already crossed the 20- or 25-year threshold, forgiveness is applied automatically at the milestone, even if the borrower isn’t currently on an IDR plan.²

After discharge, you owe nothing more on the forgiven loans. If a loan was in default before discharge, that default status may be removed from your credit record and adverse delinquency information may be deleted. Borrowers who no longer have any defaulted loans regain eligibility for new federal student aid.¹³ If only part of your balance is forgiven, you’ll keep paying on whatever remains.

What to Do Now

Over a 20- or 25-year window, the biggest risk isn’t the rules; it’s a servicer miscount that goes unnoticed until the finish line. A few habits protect your progress:

Log into StudentAid.gov at least once a year and confirm your qualifying payment count matches your own records.
Keep documentation of every annual recertification and every plan change.
If you were on SAVE, verify which plan you’ve been moved to and how your prior payments were credited.
If you’re a parent borrower with PLUS Loans, know that ICR and its 25-year timeline are your only route.
Start planning for the 2026 tax exposure well before your discharge year, including whether the insolvency exclusion is likely to apply.

Catching an error early is far easier than disputing one after 240 or 300 payments have supposedly been made.

1
Federal Student Aid. Student Loan Forgiveness and Other Ways the Government Can Help You Repay Your Loans
2
Consumer Financial Protection Bureau. Student Loan Forgiveness
3
eCFR. 34 CFR 682.215 – Income-Based Repayment Plan
4
U.S. Department of Education. U.S. Department of Education Announces Agreement with Missouri
5
Federal Student Aid. Court Actions – IDR
6
eCFR. 34 CFR 685.209 – Income-Driven Repayment Plans
7
Federal Student Aid. Income-Driven Repayment (IDR) Plan Request
8
eCFR. 34 CFR 685.209 – Income-Driven Repayment Plans
9
Office of the Law Revision Counsel. 26 U.S. Code 61 – Gross Income Defined
10
Office of the Law Revision Counsel. 26 U.S. Code 108 – Income from Discharge of Indebtedness
11
Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not?
12
Internal Revenue Service. What If I Am Insolvent
13
Federal Student Aid. Student Loan Forgiveness