The current state of federal student loan forgiveness

Federal student loan forgiveness is not happening automatically for most borrowers right now. The broad forgiveness program that would have canceled up to $20,000 in debt per borrower was blocked by the Supreme Court in June 2023. That means if you were counting on that program, it will not move forward in its original form.

What does exist are narrower forgiveness programs that target specific groups of borrowers. These programs have been running for years and continue to operate. They are not new, and they do not apply to everyone — but they do cancel debt for people who meet their particular requirements.

Student loan payments and interest have been paused since March 2020. That pause is set to end in late 2024, meaning monthly payments will resume. This affects all federal student loan borrowers, whether or not they are part of a forgiveness program.

Key Takeaways

  • The broad forgiveness program that would have canceled $20,000 per borrower was blocked by the Supreme Court and will not proceed as originally designed.
  • Forgiveness programs that do exist target specific groups: Public Service Loan Forgiveness for government and nonprofit workers, Teacher Loan Forgiveness for teachers, and Permanent Disability Discharge for disabled borrowers.
  • Income-Driven Repayment plans can lower your monthly payment to as little as $0 per month if your income is low enough, and forgive remaining debt after 20 to 25 years of payments.
  • Federal student loan payments restart in late 2024 after a pause that began in March 2020, so you should prepare for monthly payments to resume.

Forgiveness programs that are currently operating

Public Service Loan Forgiveness (PSLF) cancels remaining federal student loan debt after you make 120 may have access to monthly payments while working full-time for a government agency or a nonprofit organization. The employer must be a federal, state, or local government agency, or a nonprofit with 501(c)(3) status. You must be on an Income-Driven Repayment plan. After 120 payments — roughly 10 years — any remaining balance is forgiven. The Department of Education has a PSLF Help Tool on its website where you can check your payment count and employer status.

Teacher Loan Forgiveness cancels up to $17,500 in federal student loans if you teach full-time for five consecutive school years in a low-income school or educational service agency. The school must be listed in the Department of Education's database of low-income schools. You apply through your loan servicer after you complete the five years. This program has been in place since 1998 and continues to operate.

Permanent Disability Discharge cancels all federal student loans if you are totally and permanently disabled. Disability is determined by the Department of Veterans Affairs, the Social Security Administration, or a physician's certification. You submit documentation to your loan servicer. This program does not require employment or income level — it is based solely on disability status.

Income-Driven Repayment (IDR) plans are not forgiveness in the traditional sense, but they result in debt cancellation. These plans cap your monthly payment at a percentage of your discretionary income — often resulting in payments of $0 per month if your income is low. After 20 to 25 years of payments (depending on the plan), any remaining balance is forgiven. You must recertify your income annually to stay on the plan.

What happened to the broad forgiveness program

In August 2022, the Biden administration announced a plan to cancel up to $20,000 in federal student loan debt per borrower for those earning under $125,000 per year (or $250,000 for married couples filing jointly). The program would have affected roughly 43 million borrowers and cost an estimated $400 billion.

Six Republican-led states sued to block the program, arguing it exceeded the President's authority. The Supreme Court ruled 6-3 in June 2023 that the program violated the Administrative Procedure Act because Congress had not explicitly authorized such broad debt cancellation. The program was blocked before any borrowers received forgiveness under it.

The administration has not announced a replacement program with the same scope. Discussions about alternative approaches have continued, but nothing has been enacted into law. This means the broad forgiveness program will not happen unless Congress passes new legislation.

Income-Driven Repayment as a path to forgiveness

If you do not may have access to for PSLF, Teacher Loan Forgiveness, or Permanent Disability Discharge, an Income-Driven Repayment plan may be your most direct route to eventual forgiveness. These plans recalculate your payment based on your current income and family size, not on your loan balance.

There are four Income-Driven Repayment plans: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). REPAYE is the newest and often results in the lowest payment. On any of these plans, if your income is very low or you have a large family, your payment can be $0 per month. You still accrue interest, but you are making a may have access to payment for PSLF purposes if you work in public service.

After 20 years on REPAYE or PAYE, or 25 years on IBR or ICR, any remaining loan balance is forgiven. The forgiven amount may be taxable as income in the year of forgiveness, depending on your state and the tax rules in effect at that time. You must recertify your income every year to stay on the plan.

When federal student loan payments restart

The pause on federal student loan payments and interest that began in March 2020 is scheduled to end in late 2024. Once payments restart, you will owe a monthly payment on any federal student loans you hold, unless you are on an Income-Driven Repayment plan with a $0 payment or you are in deferment or forbearance.

Your loan servicer will contact you before payments restart to tell you your new payment amount and due date. If you are not sure who your servicer is, you can find out at studentaid.gov by logging into your account. If your income has changed since the pause began, you may want to switch to an Income-Driven Repayment plan before payments restart, because that plan will recalculate your payment based on your current income.

If you cannot afford your payment when it restarts, contact your loan servicer immediately. Do not ignore the bill. Your servicer can discuss Income-Driven Repayment, deferment, forbearance, or other options to lower or pause your payment.

Private student loans and forgiveness

None of the forgiveness programs described above apply to private student loans. Private loans are issued by banks, credit unions, and other private lenders, not by the federal government. They do not have forgiveness programs, Income-Driven Repayment options, or the same protections as federal loans.

If you have private student loans, your options are limited to refinancing (which means taking out a new loan at a different interest rate), negotiating with your lender, or paying the loan off. Some private lenders offer forbearance or deferment in cases of hardship, but this is at the lender's discretion and is not may provide.

If you have both federal and private loans, prioritize understanding your federal loan options first, because those are where forgiveness and payment reduction programs exist.

Frequently Asked Questions

Will there be another broad forgiveness program like the one that was blocked?

It is uncertain. The Supreme Court ruling does not prevent Congress from passing new legislation to authorize forgiveness. However, Congress would need to pass a law, which requires agreement between the House, Senate, and President. No such law has been proposed or passed. Any future forgiveness program would depend on political conditions and legislative action.

If I am on an Income-Driven Repayment plan, will my payment really be $0?

Your payment can be $0 if your income is low enough relative to your family size and the plan you choose. On REPAYE, your payment is 10% of your discretionary income. If your discretionary income is $0 or negative, your payment is $0. You must recertify your income every year. Interest still accrues, but you are making a may have access to payment for PSLF if you work in public service.

Can I get forgiveness if I work for a nonprofit that is not a 501(c)(3)?

PSLF requires your employer to be a government agency or a 501(c)(3) nonprofit. Other types of nonprofits do not may have access to. You can check your employer's status using the PSLF Help Tool on studentaid.gov. If your employer does not may have access to, you may still reach forgiveness through an Income-Driven Repayment plan after 20 to 25 years.

What happens to the forgiven amount — do I owe taxes on it?

Under current law, forgiven federal student loan debt may be taxable as income in the year it is forgiven. However, this rule has changed before and may change again. When forgiveness occurs, your loan servicer will send you a 1099-C form reporting the forgiven amount. Consult a tax professional about your specific situation, as tax treatment depends on the forgiveness program and the tax rules in effect at that time.

Do I need to do anything right now to prepare for payments to restart?

Yes. Log into your account at studentaid.gov to confirm your loan balance and servicer. If your income has changed significantly since 2020, consider switching to an Income-Driven Repayment plan before payments restart — this will lower your payment based on your current income. If you work in public service, verify your employment and payment count through the PSLF Help Tool. Contact your servicer if you have questions about your specific loans.