What is student loan forgiveness?

In certain situations, you can be eligible to have your student loan debt partially or completely eliminated through what’s known asĀ forgiveness.


This is the most common means of student debt elimination, as there are various programs specifically designed to write off remaining debt for graduates/former students after a certain time frame. In order to be eligible, you must:

  • work in a qualifying job/career field, such as teaching in a high-need area, for a particular length of timeĀ 
  • have financed your loans through a qualifying repayment plan which forgives your debt after several years of making on-time payments

It is often advisable to opt for a Federal Loan over a privately held loan if you anticipate you’ll be seeking student debt forgiveness.

Public Service Loan Forgiveness

PSLF eliminates remaining balances for nonprofit and public service employees after 10 years. An example is Teacher Loan forgiveness, which stipulates that any borrower who teaches full-time for five complete, consecutive academic years in a low-income school or educational service agency and meets additional qualifications may be eligible for forgiveness of up to $17,500 of loan debt.


In terms of taxability, the amount forgiven under federal forgiveness programs such as PSLF is considered tax-free. Meaning, you are not required to claim the forgiven amount as taxable income on your federal tax returns.

However, for income-contingent and income-based repayment plans, the forgiven balance at the end of the 25 year period is considered taxable income, usually at a rate of 25-30%- so be sure to save accordingly! If you are unable to settle the amount in one payment, the IRS alternatively offers short and long-term repayment plans.