What Happens to Student Loans After 25 Years? Forgiveness is Possible

#1 Student loan lawyer

Updated on January 23, 2024

Federal student loans are forgiven after you pay on your loans for 25 years while in an income-driven repayment plan.

You can get your federal student loans forgiven after 25 years — but only if you pay your loans under an income-driven repayment plan. You can request entry into one of the four IDR plans by applying online, but contact your federal loan servicer if you need help.

This forgiveness program was broken for many years. Borrowers who couldn’t keep up with their student loan payments were steered into forbearance and missed out on earning credit towards forgiveness. Those who did get into a qualifying plan faired no better. Servicers frequently failed to accurately record their qualifying payments, a problem highlighted in a recent NPR investigation.

The Biden administration has pledged to fix this program. On Apr. 19, the U.S. Department of Education announced it would use one-time fixes to retroactively credit millions of people with additional payments toward the 300 monthly payments needed for loan forgiveness.

Keep reading to learn how to get federal student loan forgiveness after 25 years.

Student Loan Forgiveness Resources:

Disclaimer: Although I am a student loan lawyer, this article contains general information and should not be taken as legal advice. If you want legal advice that pertains to your specific situation, you should schedule a call with me.

Thumbnail from IDR Waiver FAQ video.

Watch this video to learn how student loan forgiveness after 25 years works.

Can student loan debt be forgiven after 25 years?

The Education Department will forgive your remaining loan balance after you pay on your loans for 25 years under one of its income-driven repayment plans. This benefit, known as IDR forgiveness, applies only to federal student loan borrowers.

Lenders don’t cancel private student loans after several years of payments. If you’re struggling to repay your loans, call your servicer and ask about your options. You can also look into refinancing to get a lower interest rate and longer repayment term, which will give you a more affordable payment. Read more about how to reduce student loan payments.

The government offers four income-driven repayment plans: income-based repayment, income-contingent repayment, Pay As You Earn, and Revised Pay as You Earn. Each plan automatically forgives your remaining debt after 20 to 25 years of payments.

Your loans will be written off after 25 years if you borrowed Parent PLUS Loans, federal loans in graduate school, or pay your loans back under the ICR or IBR plan.

Learn More: Which Student Loan Repayment Plan is Best?

What Happens to Student Loans After 25 Years?

Loans under Income-Driven Repayment (IDR) plans may be forgiven after 20 or 25 years of payments. Recent changes by the Department of Education allow some deferments and forbearance periods to count towards this. Loans meeting these criteria could be forgiven as early as Spring 2023, with ongoing forgiveness thereafter.

We did a deep dive on the IDR Account Adjustment if you want to check that out.

What Happens If You Don't Pay Off Student Loans in 25 Years?

What happens if you don’t pay off student loans in 25 years? Any remaining balance on your student loans will be forgiven after 25 years of payments. But be cautious: You may be required to pay income tax on the forgiven amount.

Timeline for forgiveness by loan type

  • Federal Direct Loans: 20 years if you’re eligible for the PAYE Plan or didn’t borrow loans for graduate school.

  • Federal Family Education Loans: 25 years.

  • Parent PLUS Loans (Direct and FFEL): 25 years.

  • FFEL Stafford Loans: 25 years.

Federal Perkins Loans can be forgiven after 20 or 25 years, but only if the loans are consolidated into a Direct Consolidation Loan.

Also, new borrowers who enroll in the PAYE plan and people who borrowed loans only for undergraduate studies qualify for loan forgiveness after 20 years.

The balance forgiven at the end of the repayment period will be added to your tax return as taxable income. But you may skip out on paying the IRS on that amount if lawmakers extend the American Rescue Plan, which makes forgiven debt tax-free through the end of 2025.

Learn More: How Long Do Student Loans Last?

Problems with income-driven forgiveness

Since 1994, the federal government has offered repayment options that help borrowers manage their debt when they aren’t earning enough money to afford the 10-Year Standard Repayment Plan payments. Monthly payments under the income-driven plans are based on income and family size. The monthly payment amount can be as low as $0 for borrowers with no discretionary income. Those that remain in the program will have their outstanding balances wiped out after 20 to 25 years, depending on the policy.

Lawmakers designed IDR plans to give borrowers an affordable pathway out of their student debt.

But there was a problem. Few people ever qualified for loan cancelation.

The Education Department has approved forgiveness for only 157 loans in the nearly three decades since the program launched. According to the Government Accountability Office, these feeble results resulted from widespread breakdowns in communication between the Education Department, its loan servicers, and borrowers dating back decades.

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IDR Forgiveness Waiver

To follow through on its promise, the White House recently committed to using a one-time waiver to move 3.6 million borrowers closer to forgiveness. The waiver will give eligible borrowers who qualify for the PSLF Program or an IDR payment plan m credit for periods when their loans were in deferment or forbearance.

You’ll receive a credit adjustment if you had:

  • loans in forbearance due to the interest-free payment pause

  • loans in forbearance for over 12 consecutive months and over 36 cumulative months

  • loans in deferment before Jan. 1, 2013 (except in-school deferment) and loans in economic hardship deferment on or after that date

  • loans in a military-related deferment

The Education Department also announced that in 2023, federal student aid would display income-driven repayment payment counts on studentaid.gov when borrowers log into their accounts.

Can I get credit under the PSLF Limited Waiver and the IDR Waiver? Yes! The PSLF Waiver gives public servants credit for payments they made while working full-time for the government or nonprofit. The IDR Waiver gives all borrowers credit for periods their loans were in forbearance no matter where they work.

UP NEXT: Which Student Loan Repayment Plan is Best?

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