Indiana Student Loan Forgiveness Programs

Indiana ranks 17th in the nation for student loan debt, totaling a staggering $29.8 billion. With an average debt of $32,874 per borrower, more than 906,500 residents, or 13.32% of the state’s population, are grappling with this financial burden.

Fortunately, several federal and state forgiveness programs are available to Indiana borrowers. The broad one-time cancellation announced in 2022 is not one of them — the Supreme Court struck it down in June 2023 — but the programs Congress wrote into law are still running, and Indiana has initiatives of its own.

Ahead we’ll walk you through the student loan forgiveness options available to Indiana residents, helping you make the most of these opportunities.

Related: State-Based Student Loan Forgiveness Programs

Before exploring Indiana-specific programs, let’s discuss the federal student loan forgiveness programs the Department of Education offers to all Americans, including Indiana residents.

These programs provide relief for federal student loans based on factors such as your profession or income.

The Public Service Loan Forgiveness Program

PSLF is designed for individuals with Direct Loans working in qualifying public service jobs. To be eligible, borrowers must make 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer, such as a government agency, public school, or nonprofit organization.

The One-Time IDR Account Adjustment (Completed)

A one-time IDR account adjustment announced in April 2022 counted nearly every month spent in student loan repayment or a long-term forbearance since leaving school toward income-based repayment forgiveness. Borrowers who crossed 20 or 25 years of credited time had their remaining balances discharged.

All federal student loans were eligible, including Parent PLUS Loans, Consolidation Loans, Federal Family Education Loans, and Perkins Loans, though some borrowers had to consolidate to be included.

The adjustment closed to new consolidations on June 30, 2024, and the Department of Education finished processing it in early 2025. Nothing has replaced it.

The 2022 Broad Debt Cancellation Plan Is Over

The one-time cancellation of $10,000 to $20,000 announced in August 2022 never took effect — the Supreme Court struck it down in June 2023 — and the pandemic-era payment pause and interest freeze ended that same year. There is nothing left to wait for there. The programs above are the live federal routes, and the 2025 budget law rewrote the repayment system around them: SAVE is gone, the Repayment Assistance Plan took its place for loans made on or after July 1, 2026, and PAYE and ICR close on June 30, 2028.

Indiana offers several student loan forgiveness programs for residents in specific professions, such as law and healthcare. These programs are designed to help those serving in underserved communities. Below, we highlight four notable programs grouped by career.

Legal Profession

Richard M. Givan Loan Repayment Assistance Program

This program provides student loan repayment assistance to law graduates employed by nonprofit organizations in Indiana. To be eligible, applicants must be licensed to practice law in Indiana, work for a qualifying civil legal aid employer, and have an annual salary of $70,000 or less.

Program Details: Indiana Bar Association – Richard M. Givan Loan Repayment Assistance Program

Terrence and Peggy Cody Loan Repayment Assistance Fund

Offered through the Indiana Bar Association, this program is designed for law graduates working for civil legal aid providers, county Department of Child Services offices, and county Public Defender’s offices in Indiana. Preference is given to individuals working for a qualifying employer in Floyd County, Indiana.

Program Details: Indiana Bar Association – J. Terrence and Peggy Cody Loan Repayment Assistance Fund

Indiana Law Loan Reduction Assistance Program

Provided by Indiana University’s Maurer School of Law, this program covers expenses outside of federal student aid related to passing the bar, including the bar review course, bar application fees, and living expenses while preparing for the bar. The program offers up to $4,000 total for qualified applicants.

Program Details: Indiana University Maurer School of Law – Indiana Law Loan Reduction Assistance Program

Healthcare Profession

Indiana Health Care Professional Recruitment and Retention Fund Program (IHCPRRF)

Eligible healthcare professionals can receive partial loan forgiveness through the IHCPRRF. To qualify, you must hold a license to practice medicine in an eligible healthcare profession and have completed at least one year of work in a qualifying shortage area or community, migrant health center, or maternal and child health clinic in a shortage area.

Program Details: Indiana State Department of Health – Indiana Health Care Professional Recruitment and Retention Fund Program

Start with the federal rule, because Indiana builds on it. The American Rescue Plan exclusion that made most student loan cancellation federally tax-free expired on December 31, 2025 and was not renewed. Forgiveness received in 2026 or later is federally taxable again — with exceptions that stay tax-free: Public Service Loan Forgiveness, death and total-and-permanent-disability discharges, loans discharged in bankruptcy, and amounts you can exclude because you were insolvent.

Indiana’s adjusted gross income (AGI) computation starts with federal AGI, so forgiveness that is federally taxable generally flows onto your Indiana return too.

Indiana then adds a second layer. The state decoupled from the federal provision that excluded a student loan discharge from income, so some forgiveness can be taxed by Indiana even where federal law leaves it out. What that reaches has shifted as the federal exclusion itself has changed, so confirm the current treatment with a tax professional or the Indiana Department of Revenue.

Exceptions to Indiana State Tax on Loan Forgiveness

Public Service Loan Forgiveness, Teacher Loan Forgiveness, and the National Health Service Corps Loan Repayment Program are excluded from federal income under their own provisions rather than the one Indiana decoupled from, so they are not subject to Indiana income tax.

Impact on Borrowers’ Financial Aid and Loan Balance

Indiana’s taxation of a forgiven balance can affect financial aid and adds to what you owe the state in the year the forgiveness lands.

Stay informed about your lender’s policies and any changes to state tax regulations during the legislative session, as these can affect the tax amount owed on forgiven loans.

Estimating Tax Amounts Owed on Student Loan Forgiveness

The tax amount owed on student loan forgiveness depends on the amount forgiven and the state and county income tax rates for the tax year when the forgiveness is received.

As a rough illustration, at a 3% state rate:

• about $300 on $10,000 of student loan forgiveness

• about $600 on $20,000 of student loan forgiveness

County tax comes on top of that. Check the state and county rates in effect for the year your forgiveness lands, because both change.

Adjusting Payroll Tax Withholding

If you’re worried about insufficient payroll tax withholding to cover a balance due, consider adjusting your W-4 with your employer or making an estimated payment during the year when the debt is forgiven or discharged.

In Indiana, various state-specific student loan forgiveness programs are available to taxpayers and professionals in essential fields such as teaching, dentistry, and public service. These programs offer crucial financial relief and support to those who qualify and are dedicated to serving their communities.

These state-specific programs run on their own rules and were untouched by the 2026 federal changes, so they remain accessible to eligible borrowers in Indiana.

Stay up-to-date with the latest developments in debt cancellation, both in Indiana and at the federal level, and seize the opportunities available. Enhance your understanding of these programs and make informed decisions by subscribing to our newsletter today.

If your situation is more tangled than a program application — a forgiveness denial, years of miscounted payments, a private loan lawsuit — a student loan lawyer in Indiana can actually move the needle. Tell us what’s going on and we’ll let you know whether it’s something we can help with.