Minnesota Student Loan Forgiveness Programs

Minnesota’s student loan debt totals $26.5 billion, affecting over 788,600 residents. With an average debt of $33,604 per borrower, many need financial help.

This article explores federal and state-specific loan forgiveness programs in Minnesota.

These aid a range of professionals, including health workers and teachers. The broad one-time cancellation announced in 2022 never took effect, but there are other routes Minnesotans can take to ease their student debt.

Read on to learn about these opportunities and make your first step toward financial freedom.

Related: State-Based Student Loan Forgiveness Programs

There’s good news for Minnesotans carrying the weight of federal student loans. Several federal programs, brought to you by the U.S. Department of Education, offer relief based on your income or profession.

Public Service Loan Forgiveness Program

First up is the Public Service Loan Forgiveness (PSLF) Program.

You may qualify if you’re working full-time in a public service job (think government agencies, public schools, or nonprofits).

The goal: Make 120 qualifying payments while employed full-time by a qualifying employer, and say goodbye to your Direct Loans.

The One-Time IDR Account Adjustment (Completed)

Next, there’s the one-time IDR account adjustment introduced in April 2022.

It counted time spent in repayment, forbearance, and some periods of deferment toward income-driven forgiveness, and borrowers who crossed 20 or 25 years of credited time had their outstanding balances wiped clean.

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. Consolidating FFEL or Perkins loans into a Direct Consolidation Loan is still what makes them eligible for income-driven plans and for PSLF, and it is free on the Federal Student Aid website, StudentAid.gov. Borrowers who refinanced their federal loans with private lenders gave up access to all of it.

Teacher Loan Forgiveness Program

Are you a teacher? The Teacher Loan Forgiveness Program might be for you.

If you’ve worked full-time for five consecutive years in a low-income school or educational service agency, your federal Direct or Stafford Loans could be forgiven.

Forgiveness amounts can reach up to $17,500 for highly qualified math, science, and special education teachers and up to $5,000 for other eligible teachers.

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.

In Minnesota, lawmakers have created several state-specific programs to alleviate the burden of educational debt for residents working in various professions or certain geographic regions. These programs are a form of financial aid and represent a real commitment to student debt relief.

Health Professional Education Loan Forgiveness Program

Administered by the Minnesota Department of Health (MDH), this program supports health professionals such as nurse practitioners, dentists, and mental health professionals serving in areas with a shortage of healthcare providers, including rural areas outside the Twin Cities of Minneapolis and St. Paul.

Qualified applicants can receive loan repayment assistance, the amount of which varies based on the availability of funds and individual circumstances. The Office of Rural Health and Primary Care (ORHPC) assists in managing this program.

Minnesota State Loan Repayment Program

Another initiative by the MDH and ORHPC, this program assists healthcare professionals, including pharmacists, who agree to serve in designated shortage areas. Specific details about the amount and duration of assistance are determined on a case-by-case basis, with loan servicers coordinating monthly payment adjustments.

Large Animal Veterinarian Loan Forgiveness Program

Managed by the MDH, under an interagency agreement with the Office of Higher Education (OHE), this program provides aid to vets working with large animals in rural areas. Vets must obtain proper licensure and can receive up to $15,000 per year for up to five years.

Teacher Shortage Loan Forgiveness Program

Administered by OHE, this program offers financial assistance to educators teaching in a teacher-shortage area, helping to alleviate their monthly student loan payments. Eligible teachers can receive up to $1,000 per year for a maximum of five years.

Agricultural Education Loan Forgiveness Program

This OHE-administered initiative provides relief to individuals committed to farming in Minnesota for at least five years. Successful applicants can receive up to $5,000 per year for up to five years. It’s part of the state’s efforts to provide student loan payment relief.

Aviation Degree Loan Forgiveness Program

Also run by OHE, this program supports graduates with aviation degrees who commit to work in Minnesota. The amount of assistance varies and is determined on an individual basis. It’s a great option for those looking into refinancing their educational debt.

John R. Justice Student Loan Repayment Program

Although not state-funded, this federally funded program is administered by OHE. It provides loan repayment assistance for public defenders and prosecutors in Minnesota. The rules, including the amount of assistance, are established in federal law.

In addition to these state-based programs, the National Health Service Corps (NHSC) Loan Repayment Program offers repayment assistance for health professionals. This federal program is available to Minnesotans and is governed by the federal Public Health Service Act.

In the context of student loan forgiveness, a pertinent question for Minnesotans is, “Does Minnesota tax student loan forgiveness?” The answer isn’t straightforward and is tied to the specifics of the loan forgiveness program.

The federal rule changed at the start of 2026

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.

That change is what makes the Minnesota question matter. While the federal exclusion was in place, these discharges never entered federal income, so there was nothing for the state to tax. Now they do.

Minnesota has its own subtraction, and it survived the federal sunset

Minnesota allows a subtraction for a qualified student loan discharge, so a discharge that is federally taxable can still come off your Minnesota return. The state wrote the subtraction to outlast the federal exclusion: a discharge that happened after December 31, 2025 still qualifies as long as it would have met the federal standard while that standard was in force.

The discharges that qualify include:

• Loans discharged through Minnesota’s Teacher Shortage Loan Repayment Program

• Loans forgiven under income-based repayment plans

• Loans forgiven under income-contingent repayment plans

• Loans discharged under the Pay As You Earn (PAYE) or Revised Pay As You Earn (REPAYE) programs

That list is not exhaustive. The test is whether the discharge would have qualified under the federal exclusion as it stood, and that exclusion was broad.

Where it gets less certain

The Repayment Assistance Plan replaced SAVE for loans made on or after July 1, 2026, and it is newer than the plans the subtraction names. Because the list is open-ended, a RAP discharge may well qualify, but it has not been spelled out. If you are heading for forgiveness under RAP, that is the specific question to put to a tax professional.

Forgiveness that falls outside the subtraction altogether is a harder question. Minnesota tax law does not align with federal law at every point on student debt relief, so a forgiven amount outside it could be treated as taxable income by the state.

Advice for Minnesota Residents

Work out the Minnesota side before the balance is cancelled rather than after. Whether the subtraction reaches your discharge turns on which plan forgave the loan and in what year, and it is worth confirming with a tax professional or the Minnesota Department of Revenue.

We are not tax advisors, and this is a moving area — treat it as a starting point.

Minnesota offers many state-specific student loan forgiveness programs, providing significant aid to professionals dedicated to their communities. These Minnesota-focused initiatives run on their own rules and were untouched by the 2026 federal changes, so they remain accessible to eligible borrowers.

Staying on top of the latest in debt cancellation in Minnesota and federally is crucial. For the most current insights and opportunities, consider subscribing to our newsletter and make your journey to financial freedom informed and achievable.

If your situation is more tangled than a program application — a forgiveness denial, years of miscounted payments, a private loan lawsuit — that’s where a student loan lawyer in Minnesota 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.