The biggest federal student loan forgiveness changes right now: the SAVE plan is permanently gone, the menu of income-driven repayment plans is shrinking under a new law, the tax exemption on forgiven IDR balances expired at the end of 2025, and Public Service Loan Forgiveness has moved onto a new federal platform. Borrowers still parked in SAVE-related forbearance need to pick a new plan, because those months are not counting toward anything.
SAVE Is Permanently Ended
The Saving on a Valuable Education plan no longer exists. A settlement between the Department of Education and the State of Missouri ended it after multiple federal courts blocked the plan. No new borrowers can enroll, pending applications have been denied, and every borrower still on SAVE must move to a different repayment option.1U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan
Starting July 1, 2025, servicers began sending notices telling SAVE borrowers to choose a legal repayment plan within 90 days. If you don’t pick one, you’ll be placed automatically into either the Standard Repayment Plan or the new Tiered Standard Plan.1U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan
Sitting in the SAVE-related forbearance is not neutral. Interest resumed on these accounts in August 2025, so balances are growing. And the months you spend in that forbearance do not count toward IDR forgiveness or toward PSLF.2Federal Student Aid. IDR Plan Court Actions – Impact on Borrowers If you haven’t moved yet, contact your servicer rather than waiting.
Which Repayment Plans Are Still Available
The One Big Beautiful Bill Act is narrowing the IDR menu on a date-based schedule. Borrowers whose loans were taken out before July 1, 2026, still have access to Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn. Borrowers who receive new loan disbursements on or after July 1, 2026, will only have IBR available. ICR and PAYE are being phased out for future borrowers.3Federal Student Aid. One Big Beautiful Bill Act Updates
Under IBR, borrowers who first took out loans before July 1, 2014, pay 15% of discretionary income and reach forgiveness after 25 years. Those who first borrowed on or after that date pay 10% and reach forgiveness at 20 years. IBR payments are capped at what you’d owe on a standard 10-year plan.3Federal Student Aid. One Big Beautiful Bill Act Updates
Two new plans launched July 1, 2025: a Repayment Assistance Plan and a Tiered Standard Plan. The Tiered Standard Plan sets fixed repayment terms of 10, 15, 20, or 25 years based on your total balance, so larger debts get a longer runway and lower monthly payments.1U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan Parent PLUS borrowers who haven’t consolidated cannot enroll in IBR, so their realistic options are the Tiered Standard Plan or the Standard Repayment Plan.
The One-Time IDR Account Adjustment Is Finished
The Department’s one-time account adjustment to correct IDR payment counts wrapped up in fall 2024, and updated counts began appearing on borrower accounts in January 2025.4Federal Student Aid. Payment Count Adjustments Toward Income-Driven Repayment and Public Service Loan Forgiveness Programs If you haven’t looked at your account since then, log into StudentAid.gov and see whether your count moved.
The adjustment credited borrowers for time that previously didn’t qualify, including long stretches in forbearance (12 or more consecutive months, or 36 or more cumulative months before July 2024), economic hardship and military deferments from 2013 onward, most pre-2013 deferments, and time repaying earlier loans before consolidation.4Federal Student Aid. Payment Count Adjustments Toward Income-Driven Repayment and Public Service Loan Forgiveness Programs Borrowers whose new counts qualified them for immediate forgiveness were contacted directly.
The adjustment applied to all Direct Loans and federally owned FFEL loans. Commercially held FFEL loans only qualified if the borrower submitted a consolidation application by June 30, 2024, with disbursement before October 1, 2024. That window has closed.4Federal Student Aid. Payment Count Adjustments Toward Income-Driven Repayment and Public Service Loan Forgiveness Programs
PSLF: New Platform, New Buyback Path
PSLF administration has moved off MOHELA and onto StudentAid.gov. Payment counts, employment certification, and account management now happen through the federal portal, and all loan servicers can handle PSLF accounts.5Federal Student Aid. Public Service Loan Forgiveness If your servicer changed during the transition, your PSLF data should have moved with it. You can verify a current or past employer’s eligibility using the PSLF Employer Search tool on StudentAid.gov.6Federal Student Aid. Public Service Loan Forgiveness Employer Search
PSLF Buyback
Buyback lets you make retroactive payments for months you spent in deferment or forbearance that didn’t count as qualifying PSLF payments. You need 120 months of approved qualifying employment, and buying back the months has to actually result in forgiveness.7Federal Student Aid. Public Service Loan Forgiveness Buyback
The process, in order:
- Certify your employment for any unreported periods using the PSLF Help Tool.
- Identify the months of deferment or forbearance you want to buy back and confirm you have approved qualifying employment for those same months.
- Submit a request through PSLF Reconsideration, choosing “PSLF Buyback” as the reconsideration type.
- If approved, you’ll receive a buyback agreement with the amount owed, which you must pay within 90 days of the email notification.
The amount is based on what your monthly payment would likely have been at the time. If you were on an IDR plan immediately before or after the gap, the Department uses the lower of the two surrounding IDR amounts. If you weren’t on IDR, the Department will request your tax information and family size for that period and calculate what you would have owed. If the calculation comes out to zero, no payment is required and forgiveness moves forward.7Federal Student Aid. Public Service Loan Forgiveness Buyback
Disability and Closed School Discharges Still Work Normally
If you receive Social Security Disability Insurance or certain VA disability benefits, you may be flagged for an automatic Total and Permanent Disability discharge through data matches the Department runs with SSA and the VA. You’ll receive a letter, and the discharge goes through unless you opt out.8Federal Student Aid. Total and Permanent Disability Discharge The old three-year post-discharge income monitoring period is gone as of 2023; a TPD discharge can now only be reversed if you take out new federal student loans or a TEACH Grant within three years of the discharge date.9Federal Student Aid. Automatic Total and Permanent Disability Discharge Through Social Security Administration Data Match
If your school closed while you were enrolled, during an approved leave of absence, or within 180 days after you withdrew, your federal loans for that school can be fully discharged. For closures on or after July 1, 2023, the discharge is automatic roughly one year after the Department establishes the closure date, though you can apply through your servicer sooner if you don’t want to wait.10Federal Student Aid. Closed School Discharge If you finished your program through a teach-out agreement at another school, you don’t qualify.
Forgiven IDR Debt Is Taxable Again in 2026
This is the change most likely to catch borrowers off guard. The American Rescue Plan Act’s federal tax exemption on forgiven student loan debt expired on December 31, 2025. Starting in 2026, if your federal balance is discharged through an income-driven repayment plan, the forgiven amount is generally treated as cancellation of debt income on your federal return.11Taxpayer Advocate Service. What to Know About Student Loan Forgiveness and Your Taxes
Not everything is taxable. PSLF discharges remain tax-free under a separate, permanent provision of the tax code that excludes loan discharges tied to working for a qualifying employer for a required period.12Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness TPD discharges are also excluded from income. It’s IDR forgiveness after 20 or 25 years of payments that’s newly taxable for discharges in 2026 and beyond.
Your servicer will report a taxable discharge to the IRS on Form 1099-C, and you’ll report it as other income. On a large remaining balance the tax bill can be significant. If you’re within a few years of IDR forgiveness, start setting money aside, and check whether the IRS insolvency exception applies to you. That exception can reduce or eliminate the tax on cancelled debt when your total liabilities exceeded your total assets at the time of discharge.
Don’t Stop Paying, and Don’t Trust Anyone Charging You a Fee
With this much moving at once, some borrowers freeze and stop paying. Default triggers immediate acceleration of the full balance, seizure of tax refunds and federal benefit payments, wage garnishment, credit reporting, and the loss of access to deferment, forbearance, and IDR — the tools you’d need to fix the situation.13Federal Student Aid. Student Loan Delinquency and Default For very low incomes, IDR payments can calculate to zero and still count toward forgiveness, so an IDR plan almost always beats missing payments.
Anyone charging you an upfront fee for “student loan forgiveness assistance” is almost certainly a scammer. Consolidation, plan changes, deferment, forbearance, and PSLF certification are all free through your servicer and StudentAid.gov. Red flags: unsolicited contact, requests for your FSA login, pressure to act before a fake deadline, and official-sounding names using “federal” or “national.”14Federal Trade Commission. Student Loan Debt Relief Scams Report suspected scams at FTC.gov/complaint.
Broad Hardship-Based Forgiveness Is Not Coming
The proposed Higher Education Act rule that would have cancelled debt for borrowers experiencing financial hardship was formally withdrawn in December 2024, with no replacement proposed.15Federal Student Aid Partners. Student Debt Relief Based on Hardship – Withdrawal of Notice of Proposed Rulemaking The current paths to forgiveness are IDR discharge after 20 or 25 years, PSLF after 120 qualifying payments, and the specialty discharges for disability and school closures.