How to Get Rid of Student Loans: Forgiveness, Discharge, Bankruptcy

If you want to get rid of student loans, your realistic options depend on who holds the loan and your situation: federal borrowers can pursue forgiveness after years of qualifying payments in public service or on an income-driven plan, discharge if their school closed or defrauded them, discharge for total and permanent disability, discharge at death, or in narrow cases bankruptcy. Private loans sit outside almost all of that. The programs themselves are free, and the rules shifted in 2025 and 2026, so some paths that existed a year ago are closed to new borrowers today.

Public Service Loan Forgiveness

Public Service Loan Forgiveness erases the remaining balance on your Direct Loans after 120 qualifying monthly payments while you work full-time (averaging at least 30 hours per week) for an eligible employer.¹ The 120 payments don’t have to be consecutive. You can switch jobs, take a break from public service, and come back without losing the credit you’ve already built.²

Eligible employers include any U.S. federal, state, local, or tribal government organization and any nonprofit with 501(c)(3) status. Military service, public school teaching, and work at a government hospital all count. Only Direct Loans qualify. If you still hold older Federal Family Education Loans or Perkins Loans, you’ll need to consolidate them into a Direct Consolidation Loan first, and consolidation resets your payment count to zero on the new loan.¹

Use the PSLF Help Tool on studentaid.gov to find qualifying employers, generate your certification form, and submit it electronically.³ Submit a form at least once a year and every time you change jobs. The biggest mistake borrowers make is waiting until they think they’ve hit 120 payments to file the first one, which is when missing documentation or employer disputes can delay forgiveness for months.

Forgiveness Through an Income-Driven Repayment Plan

Income-driven repayment ties your monthly payment to your income and family size instead of your balance. After 20 or 25 years, depending on the plan and whether the debt came from undergraduate or graduate study, any remaining balance is forgiven. The plans available right now have changed.

The SAVE plan is no longer enrolling borrowers. The Department of Education reached a settlement to wind it down, and borrowers previously on SAVE are being moved to other plans.⁴ The main option now is Income-Based Repayment. Under the One Big Beautiful Bill Act, you no longer need to demonstrate “partial financial hardship” to enroll. Income-Contingent Repayment and Pay As You Earn remain available to borrowers already enrolled, or to those who don’t receive a new loan disbursement on or after July 1, 2026. After that date, anyone taking out a new federal loan or new consolidation loan will only have IBR or the standard plan.⁵

Apply through studentaid.gov. The application pulls your Adjusted Gross Income from your most recent tax return and uses your family size to set the payment. You must recertify every year. Miss the deadline and your payment jumps back to the standard amount, with any unpaid interest capitalizing onto your principal. If you’re married, filing taxes separately generally keeps only your individual income in the calculation, which can lower the payment when your spouse earns significantly more.⁶

Discharge If Your School Closed or Defrauded You

If your school closed while you were enrolled, or within 180 days after you withdrew, your federal loans for that program can be discharged in full. The Department can extend the 180-day window for exceptional circumstances such as loss of accreditation, state licensing revocation, termination from federal aid programs, or a failed teach-out. In many cases the Department processes the discharge automatically. If it hasn’t and you believe you qualify, you can file through its online portal. Approval erases the debt, refunds payments you’ve already made, and clears related negative credit history.⁷

If your school misled you about job placement, program accreditation, credit transferability, or other facts that influenced your decision to enroll, you can file a borrower defense to repayment claim. You submit an application describing what the school told you, how it differed from reality, and how it affected your decision to borrow. Promotional materials, enrollment agreements, and correspondence help. Your loan sits in forbearance while the claim is reviewed; interest keeps accruing, but you don’t owe payments.⁸ Check whether the Department has already issued a group discharge covering your school before filing on your own.

Discharge for Total and Permanent Disability

If you can’t work because of a physical or mental impairment, your federal loans can be discharged. There are three ways to prove it:

A letter from the Department of Veterans Affairs showing a 100% service-connected disability rating or a determination of individual unemployability.
A Social Security Administration award letter showing your next scheduled disability review is five to seven years from your most recent determination.
A physician’s statement confirming you can’t engage in substantial gainful activity due to a condition that has lasted or is expected to last at least 60 months, or is expected to result in death.

You apply through the Federal Student Aid website. Collection activity pauses while the medical evidence is reviewed. Veterans approved through VA documentation are exempt from the post-discharge earnings monitoring that applies to other borrowers.⁹

Discharge at Death

Federal student loans are discharged when the borrower dies. For Parent PLUS loans, the discharge applies if either the parent borrower or the student the loan was taken out for passes away. A family member or representative submits proof of death to the servicer, which can be an original or certified copy of the death certificate or an accurate photocopy.¹⁰ The discharge isn’t taxable. If a servicer keeps billing or reporting the debt after proper documentation goes in, the family can file a complaint with the Consumer Financial Protection Bureau.

Bankruptcy

Student loans can be discharged in bankruptcy only if you prove repayment would impose an undue hardship on you and your dependents.¹¹ Most federal courts apply the Brunner test, which requires three showings: you can’t maintain a minimal standard of living while making payments, your financial situation is likely to persist for most of the repayment period, and you made good-faith efforts to repay. Some circuits use a broader totality-of-the-circumstances approach.

A Department of Justice process makes hardship easier to establish for federal loans held by the government. You submit a detailed attestation form to the Assistant U.S. Attorney assigned to your case. It tracks the same Brunner factors but uses IRS expense standards. Certain circumstances create a presumption in your favor, such as being 65 or older or having a disability that limits earning capacity.¹² The DOJ process covers Direct Loans and government-held FFEL or Perkins loans. Private loans aren’t included. You still have to file an adversary proceeding, a separate lawsuit inside your bankruptcy case, with full financial records supporting the hardship claim.

Parent PLUS Loans Follow Different Rules

Parent PLUS loans don’t qualify directly for most income-driven repayment plans. The traditional workaround was to consolidate the PLUS loan into a Direct Consolidation Loan and enroll in Income-Contingent Repayment, which calculates payments at 20% of discretionary income with forgiveness after 25 years.¹³ Parent PLUS borrowers who had already consolidated and enrolled in ICR before July 1, 2025, can now move from ICR to IBR, which typically means a lower monthly payment. After June 30, 2025, new consolidation loans that include Parent PLUS debt are no longer eligible for any income-driven plan.⁵ If you missed that window, standard or extended repayment is what’s left on the income side, plus PSLF if you consolidate and work for a qualifying employer.¹

Private Student Loans Sit Outside These Programs

None of the federal forgiveness or discharge programs apply to private student loans. No PSLF, no income-driven forgiveness, no borrower defense, no closed school discharge. Private lenders set their own terms, and those terms rarely include forgiveness.

If you’re struggling, call your lender about hardship forbearance, temporary interest-only payments, or a modification. Some lenders will negotiate a settlement for less than the full balance, usually only after default, when the lender has concluded full collection is unlikely. Refinancing into a new private loan at a lower rate can cut the payment if your credit and income support it. Private loans can be discharged in bankruptcy under the same undue hardship standard that applies to federal loans. They’re also subject to a state statute of limitations on collections, which runs roughly 3 to 10 years depending on your state, while federal loans can be collected indefinitely. Making a payment or acknowledging the debt in writing can restart the limitations clock, so get legal advice before touching old private debt.

The Tax Bill That May Come With Forgiveness

This is what blindsides borrowers. The temporary provision in the American Rescue Plan Act that shielded all student loan forgiveness from federal income tax expired on January 1, 2026. If your loans are forgiven through an income-driven repayment plan after that date, the IRS treats the forgiven amount as taxable income. On a $50,000 balance, that can mean a five-figure tax bill.

PSLF forgiveness is permanently tax-free. The Internal Revenue Code excludes forgiveness earned through qualifying public service from gross income, and that exclusion didn’t expire with ARPA.¹⁴ Closed school, borrower defense, and total and permanent disability discharges are also generally not taxable.

If you owe more than you own at the time your IDR forgiveness hits, the insolvency exclusion may let you exclude some or all of the forgiven amount. You qualify to the extent your total liabilities exceeded the fair market value of all your assets immediately before cancellation.¹⁵ Assets include retirement accounts and property pledged as collateral. If your liabilities exceeded your assets by $40,000 and $50,000 was forgiven, you’d pay tax on $10,000. The exclusion requires reducing certain tax attributes like loss carryforwards and asset basis, so a tax professional is worth the cost before the forgiveness date. State treatment varies: roughly 20 states conform to the federal code and will tax forgiven balances, while others have decoupled or enacted their own exclusions.

Default Is the Worst Path

Ignoring federal loans doesn’t make them disappear. After 270 days of missed payments, the loan goes into default. The government can garnish up to 15% of your disposable pay without a court order, seize your federal tax refund, and offset Social Security benefits.¹⁶ Default also wrecks your credit and blocks additional federal student aid. Any of the forgiveness or discharge paths above, even one that takes years, beats letting loans slide.

Avoid Debt Relief Scams

Every federal forgiveness and discharge program is free to apply for. A company charging you an upfront fee to reduce or eliminate your student loans is breaking the law.¹⁷ Watch for claims of Department of Education affiliation, promises of “guaranteed” or “complete” forgiveness, official-looking seals, and requests for your FSA ID login. Handing over your FSA ID can lock you out of your own account and expose you to identity theft. These companies typically either do nothing or submit you for the same free federal programs you can access yourself at studentaid.gov. If you’ve paid one or suspect fraud, file a complaint with the Consumer Financial Protection Bureau online or at (855) 411-2372. For issues involving federal aid itself, use the Department of Education’s Feedback Center.¹⁸

1
eCFR. 34 CFR 685.219 – Public Service Loan Forgiveness Program
2
Federal Student Aid. Public Service Loan Forgiveness Requirements Infographic
3
Federal Student Aid. Public Service Loan Forgiveness Help Tool
4
Federal Student Aid. IDR Plan Court Actions – Impact on Borrowers
5
Federal Student Aid. One Big Beautiful Bill Act Updates
6
Federal Student Aid. 4 Things to Know About Marriage and Student Loan Debt
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eCFR. 34 CFR 685.214 – Closed School Discharge
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eCFR. 34 CFR 685.222 – Borrower Defenses and Procedures
9
Consumer Financial Protection Bureau. Veterans – Take Advantage of Student Loan Forgiveness
10
Federal Student Aid. Discharge Due to Death
11
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
12
United States Bankruptcy Court. Navigating the New Student Loan Discharge Process
13
Consumer Financial Protection Bureau. Options for Repaying Your Parent PLUS Loans
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Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness
15
Internal Revenue Service. Publication 4681 – Canceled Debts, Foreclosures, Repossessions, and Abandonments
16
Federal Student Aid. Student Loan Default and Collections – FAQs
17
Federal Trade Commission. FTC Stops Another Student Loan Debt Relief Scheme
18
Consumer Financial Protection Bureau. Where Can I File a Financial Aid or Student Loan Complaint