Student Loan Forgiveness After 20 Years

Feeling defeated after paying student loan debt for years and seeing you owe more than what you borrowed is normal. Thankfully, federal loans offer student loan forgiveness after 20 years of payments in an income-driven repayment plan.

Federal student loan forgiveness after 20 years is an option if your loans are only from undergrad or you’re eligible for the Pay As You Earn or IBR Plan for new borrowers. Otherwise, if you have Parent PLUS Loans or loans from graduate school, you’ll have to wait five more years for loan forgiveness.

Private loans are different. Private student loan forgiveness options are typically limited to severe permanent disability loan discharge and death. No lender forgives offers forgiveness at the end of a repayment term.

Ahead, learn ways to get federal student loan forgiveness after 20 years.

The U.S. Department of Education forgives student loan debt after 20 years of qualifying payments under an eligible income-driven repayment plan. In most cases, federal student loans go away only when you make payments.

All types of loans — including spousal consolidation loans — are eligible for forgiveness after 20 or 25 years of payments except loans in default. However, if you have Parent PLUS Loans or Perkins Loans, you may need to consolidate into a Direct Consolidation Loan before qualifying for repayment plan forgiveness.

Typically, periods of deferment and forbearance don’t count towards the 20 years needed for forgiveness. However, all borrowers placed in the forbearance related to the coronavirus pandemic will receive credit towards forgiveness under their repayment plan from March 2020 through January 2022.

Learn More: Retiring With Student Loan Debt: Forgiveness and Repayment Options

Repayment plan forgiveness after 20 years happens under the following IDR Plans:

• Revised Pay As You Earn (REPAYE) Plan: for loans borrowed while in undergrad. Loans borrowed for graduate school are forgiven after 25 years of student loan payments.

• Pay As You Earn (PAYE) Plan for undergraduate and graduate student loans. Most people who borrowed federal loans before 2011 are ineligible for this payment plan.

• Income-Based Repayment (IBR) Plan: for new borrowers. People who borrowed loans before 2011 are eligible for forgiveness after 25 years.

• Income-Contingent Repayment (ICR) Plan: ineligible for forgiveness after 20 years of payments. Federal Family Education Loans and Direct Loans from undergraduate and graduate studies are eligible for forgiveness after 25 years of payments. Read more about what happens to student loans after 25 years.

You can check your eligibility and payment amount under each plan by using the Loan Simulator on the Federal Student Aid website.

Note: The payment plan you choose does not affect your interest rate. Your rate remains the same no matter which plan that you’re in. The only way to get a lower interest rate is to refinance with a private lender. Refinancing causes you to lose federal benefits like loan forgiveness and income-based payments, so it’s not for everyone.

Direct Loan Program Loans, including Direct Consolidation Loans:

• 10 years for full-time public service employees under the PSLF Program.

• 20 years under the PAYE Plan for new borrowers only.

• 20 years under the REPAYE Plan for undergraduate loans only.

• 20 years under the IBR Plan for new borrowers only.

• 25 years under IBR and ICR Plans.

FFEL Loans/Stafford Loans, Subsidized and Unsubsidized Loans: 25 years under the IBR and ICR Plans. If you consolidate FFEL Loans into a Direct Consolidation Loan, your loans may be eligible for the REPAYE, IBR, or ICR Plans and can be forgiven after 25 years of monthly payments.

Parent PLUS Loans: 25 years under the ICR Plan, but only after the debt is consolidated into a Direct Consolidation Loan. You can click here to learn more about how to get rid of Parent PLUS Loans.

Federal Perkins Loans: can be forgiven, but only if the loans are consolidated into a Direct Consolidation Loan.

Note: You’re a new borrower if you have no outstanding balance on a Direct Loan or FFEL Loan when you receive a Direct Loan or FFEL Program loan on or after

All federal student loan borrowers qualify for forgiveness of any remaining loan balance after making 20 or 25 years of qualifying monthly payments. Your eligibility for forgiveness after 20 years or 25 years depends on your type of loan, repayment plan, and when you borrowed the loans.

For each of the income-driven repayment plans, a qualifying payment is a payment made under:

• the 10-Year Standard Repayment Plan

• any income-driven repayment plan (e.g., if you switch IDR Plans, you keep eligibility for payments under the old plan)

• any other repayment program, if the payment amount is at least equal to what the payment amount would be under the 10-year Standard Repayment Plan.

You also get credit for any month you are in an economic hardship deferment. However, except for the coronavirus pandemic forbearance, any month spent in any other type of forbearance or deferment doesn’t count towards forgiveness.

The federal government has yet to create a formal application for student loan forgiveness after 20 years. Instead, your student loan servicer is supposed to keep track of the payments you’ve made while in one of the income-driven repayment plans and send you written notification at least six months before you’re expected to qualify for loan forgiveness.

Keep in mind, you have to complete the annual recertification of your income and family size to stay in an IDR plan, which means your payment amount can change yearly.

The earliest a borrower might qualify for loan forgiveness under each of the plans is:

• 2020 for ICR

• 2032 for PAYE

• 2034 for IBR

• 2035 for REPAYE

Strategies for Loan Forgiveness

• Recertify on time. You have to certify your discretionary income by the deadline date every year. Contact your servicer to confirm your recertification date.

• Track payments. Although your servicer is supposed to track the number of qualifying payments you’ve made, keep your own record. Your servicer may change over the next two decades, and errors may happen. You’ll want to have your document history to confirm your eligibility.

• Switch plans. If you’re in the ICR or IBR Plan and your loans are only from undergraduate studies, you can qualify for forgiveness five years sooner by switching to the REPAYE Plan.

• Avoid consolidation. If you have FFEL Loans and have been in the IBR or ICR Plans, consolidating into the Direct Loan Program will reset your number of payments to zero. There’s no way to get credit for prior payments.

In March 2021, President Biden signed the American Rescue Plan Act, which prohibits the IRS from treating the remaining loan balance as taxable income at the end of student loan repayment plans. Before that law was passed, student loan borrowers would have to pay taxes on the amount forgiven, which would cause them to exchange one debt for another.

The ban on student loan forgiveness as taxable income lasts through the end of 2025.

For Public Service: The Public Service Loan Forgiveness Program forgives the remaining loan balance for full-time government and non-profit organization employees after making 120 qualifying payments. Although this program has its flaws, Congress and the Biden Administration have tried to fix it with the Temporary Expanded Public Service Loan Forgiveness Program and, most recently, the PSLF Waiver. PSLF forgiveness is tax-free.

For Disabled Persons: The Total and Permanent Disability Discharge Program offers debt relief to borrowers who suffer a severe and permanent mental or physical disability. TPD cancellation is tax-free.

For Teachers: Educators who work in a low-income school can qualify for The Perkins Loan Cancellation Program and The Teacher Loan Forgiveness Program, which forgives up to $18,500 of federal student loans. In addition, the American Federation of Teachers maintains a database of available grants and funds for your continuing education, professional development, and classroom.

For Medical Professionals: Nurses, doctors, and mental health professionals qualify for PSLF. In addition, check The Association of Medical Colleges for other repayment loan forgiveness options.

For Lawyers and Legal Professionals: Prosecutors, public defenders, and other attorneys working for the government or a nonprofit qualify for PSLF. Check the American Bar Association and Equal Justice Works for additional federal and state-level forgiveness and repayment programs.

Related: Art Institutes Borrower Defense

There are many options to get partial or total forgiveness of your federal student loans — but choosing the right option for you can be confusing. If you want help developing a strategy to deal with your student loans, I’m here to help. My entire law practice is dedicated to helping borrowers with federal and private loans.

Schedule a call with me today. We’ll work together to develop a plan that allows you to meet your future goals.

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