Is Student Loan Forgiveness Still Happening? PSLF, IDR, and Discharges

Yes, student loan forgiveness is still happening. Public Service Loan Forgiveness, Income-Based Repayment forgiveness, Teacher Loan Forgiveness, and discharges for disability, school fraud, and school closures all continue to operate in 2025. What ended is the SAVE plan, which the Department of Education agreed to remove from federal regulations after courts blocked it. If you were enrolled in SAVE, you need to switch plans now to restart progress toward cancellation.

SAVE Is Dead and You Need to Switch Plans

The Saving on a Valuable Education plan was designed to lower monthly payments and forgive balances faster than older income-driven options. Courts blocked it before full implementation, and in 2025 the Department of Education formally agreed to end the program through a settlement with Missouri.¹

While the case moved through the courts, enrolled borrowers sat in administrative forbearance with no required payments. That protection is winding down. Interest began accruing again on August 1, 2025, and monthly payments including both principal and accrued interest will resume once the forbearance fully ends.²

The months spent in SAVE forbearance do not count toward Public Service Loan Forgiveness or income-driven repayment forgiveness. Borrowers who stayed in SAVE effectively paused their progress toward cancellation. The Department urges everyone still in SAVE to move to a legally active plan. Income-Based Repayment is the recommended alternative. If you already submitted an application selecting IBR, Pay As You Earn, or Income-Contingent Repayment before the SAVE forbearance, you don’t need to file a new one.²

Public Service Loan Forgiveness Is the Fastest Route

PSLF is unaffected by the SAVE litigation and remains the shortest path to full cancellation. If you work full-time for a federal, state, local, or tribal government agency, or for a 501(c)(3) nonprofit, your entire remaining Direct Loan balance can be forgiven after 120 qualifying monthly payments. That’s about 10 years.³

A qualifying payment means paying at least the full scheduled amount under an eligible repayment plan no later than 15 days after your due date. Any income-driven plan qualifies, as does the standard 10-year plan, though income-driven plans keep payments lower and leave more balance to be forgiven. Switching to a non-qualifying plan stops the count.³

Certify your employment regularly. The regulation doesn’t require annual filing, but doing it catches problems years before you hit payment 120. The PSLF Help Tool on StudentAid.gov verifies whether your employer qualifies and generates the form. MOHELA services all PSLF accounts, so completed forms go there.⁴ Once you request forgiveness after 120 payments, final review takes about 60 business days.⁵

Income-Driven Repayment Forgiveness

If you don’t work in public service, income-driven plans still lead to forgiveness after 20 or 25 years, but with a big catch right now. Because of the court orders that blocked SAVE, forgiveness under Pay As You Earn and Income-Contingent Repayment is also currently paused. Only borrowers on Income-Based Repayment who reach their forgiveness milestone can receive a discharge today. If you’re close to your forgiveness date on a different income-driven plan, switching to IBR is what preserves your path.⁶

Under the current IBR plan for loans made on or after July 1, 2014, the remaining balance is canceled after 20 years of qualifying payments at 10 percent of discretionary income. For older loans under the original IBR terms, forgiveness comes after 25 years at 15 percent.⁷

The One Big Beautiful Bill Act, enacted in 2025, opened IBR to borrowers who previously couldn’t qualify. The old “partial financial hardship” test is gone. Borrowers with loans made on or after July 1, 2014 and before July 1, 2026 can enroll regardless of income.⁷ The same law created a new Repayment Assistance Plan launching no later than July 1, 2026; payments made under it will count toward PSLF once the program is running.

One thing that will trip you up if you don’t watch for it: annual recertification. Miss the deadline and your payment jumps to whatever you’d owe under a standard 10-year plan based on the original balance, not your current income. Unpaid interest can be capitalized, added to your principal so you start paying interest on interest.⁸

The Department’s one-time IDR Account Adjustment, which reviewed every borrower’s payment history and credited periods of deferment or forbearance that should have counted, finished in August 2024. Progress is now tracked through normal servicer processing.⁶

Teacher Loan Forgiveness

Teachers have a separate, shorter program. Teach full-time at a qualifying low-income school for five complete and consecutive academic years and you can receive up to $5,000 in Direct Loan forgiveness. Highly qualified math teachers, science teachers, and special education teachers can receive up to $17,500. At least one of the five years must have been after the 1997–98 academic year, and you must have been a new borrower on or after October 1, 1998.⁹

You can’t use the same period of service for both Teacher Loan Forgiveness and PSLF on the same loans. Many teachers apply the first five years to Teacher Loan Forgiveness and then continue toward PSLF for the remaining balance.

Disability, School Fraud, and School Closure Discharges

Total and Permanent Disability

A qualifying disability must be expected to result in death, have lasted continuously for at least 60 months, or be expected to last at least 60 months.¹⁰ You can establish eligibility through documentation from the Social Security Administration, the Department of Veterans Affairs, or a licensed physician.¹¹ The application is at DisabilityDischarge.com.

After a TPD discharge, a three-year monitoring period follows. Your income cannot exceed the federal poverty guideline for a family of two, which adjusts each year. The Department does not currently require earnings documentation during the monitoring period, but the loans can be reinstated if your income exceeds the threshold.

Borrower Defense to Repayment

If your school lied to you about job placement rates, salary expectations, or credit transferability, federal loans tied to that school may be dischargeable through a Borrower Defense claim. The legal standard depends on when your loan was disbursed. For loans made before July 1, 2017, the claim is evaluated under applicable state law. For loans disbursed between July 1, 2020 and July 1, 2023, you need to show the school made a false or misleading statement that you reasonably relied on and that caused financial harm.¹²

Successful claims discharge the federal loans connected to that school, and you may also receive a refund of payments already made. Each claim is evaluated individually, so specific details about what the school told you and how it affected your enrollment decision matter. Reviews can take months.

Closed School

If your school closed while you were enrolled or within 180 days after you withdrew, your federal loans can be discharged. The Department often processes these automatically. If you finished your program through a teach-out agreement at another institution, you won’t qualify, because you were able to complete your education despite the closure. Borrowers who believe they should qualify can apply through StudentAid.gov.

Parent PLUS Borrowers Now Have Better Options

Parent PLUS loans have historically had the fewest forgiveness options. You still cannot enroll a Parent PLUS loan directly in any income-driven plan; consolidation into a Direct Consolidation Loan is the first step.

Before the OBBB, consolidated Parent PLUS borrowers were limited to Income-Contingent Repayment, which charges 20 percent of discretionary income with forgiveness after 25 years. The OBBB now lets consolidated Parent PLUS loans enroll in Income-Based Repayment, cutting the payment to 10 percent of discretionary income with forgiveness after 20 years.⁷ Parents working for qualifying public service employers can also pursue PSLF after consolidating, and the new IBR plan qualifies. If you’re a parent borrower who has been putting off consolidation, the math has shifted.

The Tax Bill Coming Back in 2026

Starting January 1, 2026, student loan forgiveness through income-driven repayment is once again treated as taxable income at the federal level. The American Rescue Plan temporarily excluded forgiven student loan debt from federal income tax for discharges between 2021 and 2025. That provision expired.¹³

The impact is real. If you’ve been in an income-driven plan for 20 years and have $80,000 forgiven, the IRS treats that $80,000 as income in the year of discharge. Depending on your bracket, the tax bill can run into the thousands. Your servicer will issue a Form 1099-C reporting the canceled amount.

PSLF forgiveness is permanently exempt from federal income tax. The statute specifically excludes loan discharges contingent on working in certain professions for a broad class of employers, which is what PSLF requires.¹³ TPD discharges are also generally not taxable. State tax treatment varies; some states follow the federal rules automatically, others have their own conformity dates. If you’re expecting IDR forgiveness soon, planning for the tax bill is essential.

How to Check Your Loans and Apply

Before applying, confirm what loans you have. Log into StudentAid.gov and check the loan breakdown. Type matters, because most forgiveness programs require Direct Loans. Older Federal Family Education Loan Program loans aren’t eligible for PSLF or most income-driven forgiveness unless you consolidate them into a Direct Consolidation Loan first.¹⁴

Think carefully before consolidating. Under regular rules, consolidation resets your payment count to zero. The one-time IDR Account Adjustment that credited borrowers with their longest payment history after consolidation ended in August 2024. Now, if you consolidate Direct Loans, retroactive PSLF credit is calculated on a weighted-average basis. If you consolidate FFEL loans after April 2024, you get no retroactive PSLF credit at all. If you’re close to forgiveness on one loan but not another, consolidating could cost you years.

Most applications go through StudentAid.gov. For PSLF, the Help Tool generates the employment certification form, which your employer signs; you can submit electronically or mail it to MOHELA.⁴ The IDR application can pull your tax information directly from the IRS with your consent. The TPD application lives at DisabilityDischarge.com.¹⁰

Keep making payments under your current plan during review. If forgiveness is approved, overpayments made during the review period are typically refunded. Once a discharge is approved, your servicer updates your balance to zero.

1
U.S. Department of Education. U.S. Department of Education Announces Agreement with Missouri to End Biden Administration’s Illegal SAVE Plan
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U.S. Department of Education. U.S. Department of Education Continues to Improve Federal Student Loan Repayment Options
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eCFR. 34 CFR 685.219 – Public Service Loan Forgiveness Program
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MOHELA – Federal Student Aid. Forms – MOHELA – Federal Student Aid
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Federal Student Aid. How to Manage Your Public Service Loan Forgiveness Progress on StudentAid.gov
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Federal Student Aid. IDR Account Adjustment
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Federal Student Aid. Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act
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MOHELA. Income-Driven Repayment Plans
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Federal Student Aid. 4 Loan Forgiveness Programs for Teachers
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Federal Student Aid. How to Qualify and Apply for Total and Permanent Disability Discharge
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eCFR. 34 CFR 685.213 – Total and Permanent Disability Discharge
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eCFR. 34 CFR 685.206 – Borrower Responsibilities and Defenses
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Office of the Law Revision Counsel. 26 USC 108 – Income from Discharge of Indebtedness
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Federal Student Aid. What to Know About Federal Family Education Loan Program Loans