Once you've completed your 5 consecutive years, you can apply for forgiveness under the program. 

Note: You cannot combine both PSLF and Teacher Loan Forgiveness.

A circumstance where it might not make sense is if you don't plan on working for 10 years. If you meet the 5 year criteria, and don't plan on teaching any longer, Teacher Loan Forgiveness could make sense.

Another circumstance where it could make sense is if you haven't consolidated your loans and have FFEL loans. Since FFEL loans don't qualify for PSLF, you could do Teacher Loan Forgiveness first, then consolidate your loans and go for PSLF. 

The difficult part of Perkins loans is that they are administered by your college where you received the loan. In order to apply for forgiveness, you need to reach out to your loan servicer or the financial aid office where you received the Perkins Loan.

Note: Perkins Loans stopped in 2017. It's pretty rare for a teacher to still have these types of loans.

Option 4. State-Based Loan Repayment Assistance Programs

45 states and the District of Columbia all offer state-based student loan repayment assistance programs. These programs are designed to help states staff teachers in areas or programs where they have shortages. 

We have a complete list of state-based student loan forgiveness programs here: Student Loan Forgiveness Programs By State.

It's important to note that, while you may qualify for multiple programs, you cannot overlap programs. For example, if you qualify for a state-based program, you cannot qualify for PSLF at the same time - you would need to do it sequentially. 

That's why it's important to look at the value of the state-based program and your own situation prior to signing up for any program.

I get a lot of questions about whether you'll pay taxes on student loan forgiveness. The questions come in many forms:

• Will I owe taxes on the amount of my student loan debt forgiven?
• What will my student loan forgiveness tax burden be?
• Is the debt forgiven tax free for student loan forgiveness?

So, will I pay taxes on my student loan forgiveness amount?

The answer is simple: all student loan FORGIVENESS programs are tax free. However, the problem comes in how your define "student loan forgiveness". There's a difference here that matters a lot.

Note: All student loan forgiveness and discharges, of any loan type, is tax-free through December 31, 2025. See more below.

All Student Loan Forgiveness And Discharge Is Tax-Free Through 2025

With the passage of the American Recovery Act in March 2021, President Biden made all student loan forgiveness and discharge tax-free on the Federal level, regardless of loan type or program.

This means all Federal loans (Direct, FFEL, or Perkins) and private loans discharged or forgiven before December 31, 2025 will be tax-free on the Federal level.

Previously, for some repayment plans like IBR or PAYE, borrowers had to worry about a tax bomb. That risk is now gone through 2025. However, it could resume in the future, but many borrowers would qualify for insolvency anyway.

However, state taxes may still apply to student loan forgiveness, as every state varies with their tax treatment of student loan forgiveness.

Defining "Student Loan Forgiveness"

The problem starts with the definition of student loan forgiveness. There are four main types of events that people bucket under the title "student loan forgiveness":

1. There are Federal student loan forgiveness programs - Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness
2. There are student loan repayment assistance programs - These are the plans offered by States and individual organizations, like we list in our Student Loan Repayment Plans by State
3. There are student loan cancellation and discharge programs - These are programs for closed schools, false certification, unpaid refunds, and death and disability
4. There are student loan repayment plans that include forgiveness as part of their repayment plan - Income Based Repayment (IBR) and Pay As You Earn (PAYE)

So let's look at the taxability of each program.

1. Federal Student Loan Forgiveness and Taxes

Federal student loan forgiveness programs are tax-free. These plans include PSLF (Public Service Loan Forgiveness), teacher loan forgiveness, law school loan repayment assistance programs, and the National Health Service Corps Loan Repayment Program.

When discussing "Student Loan Forgiveness" programs, these Federal programs are what are typically being referred to. However, state taxes may vary on these programs (for example, Mississippi does tax PSLF loan forgiveness).

Sometimes student loan scam companies try to sell victims on student loan forgiveness, but what they are really peddling are student loan repayment plans that could include student loan forgiveness at the end. These plans are taxable and are different from Federal student loan forgiveness programs.

2. Student Loan Repayment Assistance Programs

Student loan repayment assistance programs vary when it comes to taxability of the debt forgiven. These include many of the programs I list here: Student Loan Forgiveness by State.

For these programs, you have to check with the program itself and determine whether you will owe taxes on the amount forgiven. For example, law school repayment assistance is typically tax-free. However, some state-based programs are tax-free on the state level but may be subject to Federal income tax.

Each program is different, so make sure you check.

Furthermore, some of these plans may be repayment assistance programs. In which case, they fall under the rules for student loan repayment plan assistance - which are currently tax-free up to $5,250 per year.

3. Student Loan Cancellation And Discharge Programs

Student loan cancellation and discharge programs are considered taxable income. The most common student loan cancellation and discharge programs include:

• Cancellation for closed school
• Cancellation for False Certification of the loan
• Cancellation for unpaid refund of the loan

If you receive a cancellation or discharge under these circumstances, you may pay taxes on the amount of the student loan debt forgiven.

Note: Starting in 2018, President Trump made death and disability discharge tax-free. Starting 2021 through 2025, these programs will also be tax-free.

4. Student Loan Repayment Plans With Forgiveness

Finally, student loan forgiveness programs that are part of repayment programs such as IBR or PAYE (where you get your balance forgiven after making 20 or 25 years of payments) is considered taxable income. However, through December 31, 2025, these programs also are tax-free on the Federal level.

We actually break down the taxability of these programs here, and why it still makes sense: Secret Student Loan Forgiveness Programs. As you can see from those examples, just because you pay taxes on the amount forgiven doesn't mean that it's a bad deal. In fact, you'll always owe less in the end by using these programs versus not using these programs.

State Taxes On Student Loan Forgiveness

It's important to note that some states may assess taxes on student loan forgiveness, even though the federal government does not. For example, Mississippi currently taxes Public Service Loan Forgiveness, while no other state does.

Given that each of the 50 states has different laws and rules, you'll likely want to consult a tax professional in your state.

However, we do have a guide on State Taxes and Student Loan Forgiveness here.

Don't Sweat The Taxes

For many borrowers, the though of paying taxes on any amount forgiven can be daunting. However, you shouldn't worry about what the tax implication will be years down the road. The best thing you can do is pick a student loan repayment plan or pursue a forgiveness path that works for your.

There's a lot of things that can happen between now and forgiveness, including changes to the law. For example, Trump just made death and disability discharge tax free starting in 2018. And President Biden made all programs tax-free through 2025. It can change!

Furthermore, you might not even owe taxes due to insolvency. This is a complicated tax process, but we break it down here: Student Loan Forgiveness and Insolvency.

Finally, if you think you may have built some savings, you can always plan for your tax bomb. No matter what, it will be significantly less than you owe on your student loans.

Trump Student Loan Proposals For New Term

Since President Trump was re-elected, it's important to note any proposals he's making about student loan debt and student loan forgiveness.

He made a lot of changes (mostly positive) during his presidency, but he hasn't made any specific proposals about student loans. The only comment he's really made about student loans has been praising the Supreme Court decision for stopping President Biden's planned broad student loan forgiveness.

However, the big thing he's discussed is eliminating the Department of Education. This could have profound effects on the future of student loans, but likely won't have much of an impact in the short term. Trump would be the 4th President to seriously attempt to shut down the Department of Education, but it still would require an act of Congress.

Furthermore, most of the functions of the Department of Education would simply shift to other departments or back to the states. Specifically for Federal Student Aid and the student loan program, it would likely end up as part of the Department of Treasury. It would likely have minimal impact to your existing loans.

Any specific changes to loan programs or financial aid would require additional legislation - nothing which has been proposed or discussed.

What Trump Did For Student Loans While President

Let's talk about some of the things that have changed under the Trump administration. These are changes that have already gone into effect - they are the law. However, remember these laws can always be changed in the future.

Emergency Waiver On Student Loan Payments and Interest

Update: On March 13, 2020, as part of his emergency declaration for the coronavirus, Trump announced that he would be freezing/waiving student loan interest AND payments on student loans held by the Federal government. President Biden extended the waiver through August 30, 2023.

It's important to note that this is pretty limited for borrowers. Loans held by the Federal government refers to "Direct" student loans and some FFEL loans, not all FFEL loans, Perkins loans, or private loans. That means if you have FFEL loans or private loans, you don't qualify for this waiver of interest.

Also, any loans in collections will have collection activities suspended for the time being.

Finally, if you're going for loan forgiveness programs like Public Service Loan Forgiveness, the payments "missed" during this pause will still count towards your eligible payments. 

Verdict: Good.

This program is very helpful for borrowers trying to navigate the pandemic. By pausing student loan payments and interest, Trump has freed-up much needed spending in people's budgets. Yes, there are other ways to help, but this is an easy solution to help borrowers.

For borrowers losing work and income due to the coronavirus, it's essential that you immediately update or apply for income-driven repayment with an income that reflects what you're currently earning (especially if it's $0). This is the best course of action to not go into default on your student loans after the Covid-19 student loan deferment ends.

See our full guide here: What happens to your student loans during quarantine or lock-down.

The student loan debt tax bomb can happen when you have to pay taxes on the student loan forgiveness you received. However, most people will avoid the tax bomb due to a tax process called insolvency. 

While some student loan forgiveness programs, like Public Service Loan Forgiveness (PSLF) are tax-free, others - like when you get your student loans discharged under Income-Based Repayment, are potentially taxable. 

However, there's one big exception - insolvency. Insolvency is a tax situation when your liabilities (such as forgiven student loan debt) exceed your assets (like the money in your savings account). If you are technically insolvent, you may avoid some or all of the taxes associated with your loan forgiveness.

That is a big win for borrowers getting their loans forgiven under IBR, PAYE, SAVE, or ICR. Let's break down what that looks like. 

Note: With the President Biden signing the American Recovery Act in 2021, all student loan forgiveness (Federal and private from any program) is considered tax-free on the Federal level through December 2025. However, some states my not conform with Federal law, in which case insolvency may still be an important tool for loan forgiveness.

What Is Student Loan Forgiveness?

There are four main areas of student loan forgiveness, and each has its own taxability. We've talked about student loan forgiveness and taxes before, but here's a quick summary.

1. Federal Student Loan Forgiveness Programs - These include programs like PSLF, which are tax free student loan forgiveness programs.

2. Student Loan Repayment Assistance Programs - These are state-based or company-based student loan repayment programs, such as when your employer gives you $5,000 per year towards your student loan debt. These programs don't qualify for insolvency, but the amount awarded is typically considered ordinary income.

3. Student Loan Cancellation - These are programs that allow for the cancellation of your student loans. Some are considered taxable income, others aren't. For example, if you have your student loans cancelled due to a closed school discharge, that is considered taxable income. However, if you get your student loans forgiveness due to total and permanent disability, that is tax free (thanks to President Trump's Student Loan Programs). 

4. Student Loan Forgiveness Due To Repayment Plan - This is when your student loan balance is forgiven at the end of your repayment plan when you're on income-driven repayment (like IBR, PAYE, SAVE, ICR). This type of student loan forgiveness is considered taxable income and could potentially qualify for insolvency.

What Is Insolvency?

Insolvency is a technical tax term meaning that your liabilities (what you owe) exceeds your assets (what you have). When it comes to student loan debt, the forgiven debt is considered income - which you'll receive a 1099-C for the cancelled debt. That amount must be reported and there will be taxes due on that "ghost" income unless the borrower can show they were insolvent at the time of forgiveness.

To figure this out, you must calculate your "insolvency amount". This is the difference between your assets and liabilities. If your insolvency amount is greater than the forgiven debt, then you can exclude it and not pay taxes on it. If the insolvency amount is less than the forgiven debt, you might have partial insolvency.

It's important to note that for the purpose of insolvency, the IRS takes into consideration all assets you own. This includes the basics like checking and savings account, and investments, but also includes things like your retirement account values, your real estate, any business ownership, even the value of your possessions. 

To figure out the liabilities, you include any debt owed (like credit card debt, mortgage debt, etc.), along with the amount of forgiven debt (your student loans). 

Example Of Total Insolvency

Let's take a look at an example of total insolvency to highlight how this works. This situation could apply to many borrowers dealing with student loan forgiveness, so it's a good example of what can happen. 

This borrower has been on IBR for 25 years, and the loans have grown to $70,000. However, he did manage to save a little in a 401k, and does have a few assets.

In this example, he has total assets of $60,000, and total liabilities of $145,000. That makes his insolvency number $85,000. Since his student loan debt was $70,000, and that's less than the insolvency number of $85,000 - the total amount of student loan debt "ghost" income will not be considered taxable income. 

Example Of Partial Insolvency

Let's look at an example of partial insolvency, which is more common for borrowers. In this scenario, there's more student loan debt, and slightly more assets. 

In this case, the insolvency number is $100,000. Because the amount of student loan debt ($170,000) is larger than the insolvency number of $100,000, he still must include the remaining $70,000 as taxable income. 

Why Most Borrowers Shouldn't Worry About Taxes On Their Forgiven Debt

For most borrowers who are getting student loans forgiven, you shouldn't worry about the future tax implications of it. Making payments under an Income-Driven Repayment Plan are usually the best case scenario - if you could afford full payments, you would. You're on these plans because it's better than the alternative - default. 

Second, 20-25 years is a long time. There could be major changes to tax legislation before any amount of the debt is forgiven and potentially taxable.

Finally, the math still works in your favor. Only in extreme cases should larges amounts of debt be full taxable. Most borrowers will see themselves receiving total or partial insolvency, which will significantly reduce any tax burden.

And realize, you're now paying taxes on a much smaller amount of debt. For example, in the partial insolvency situation above, let's see how that would play out given current tax brackets. Let's assume this was a single guy or gal, making $45,000 per year. The taxable income of $70,000 would boost the total taxable income to $115,000. That moves him or her from the 22% tax bracket, to the 24% tax bracket. 

However, it's ghost income - meaning that you have to claim it even though no income came in. And that tax liability could hurt. That bumps his total tax bill from $3,770 to $19,010 - a huge change of $15,240. That's a big amount to pay. But, look at the big bright side. You just went from owing $170,000 on your student loans to owing just $15,240. 

You can easily setup a payment plan with the IRS, make some quick financial changes, and eliminate that debt rather quickly. 

For smaller amounts of debt, the math works out even better.

Final Thoughts

As with anything involving taxes, the math gets tricky, every situation is different, and you should really seek the advice of a tax professional when handling insolvency. It's complex, it has a high likelihood for audit, and so you want to make sure you do everything correctly. Plus, you also might have state taxes on your student loan forgiveness too.

The big lesson here is to not fear the tax consequences of the secret student loan forgiveness programs. Yes, there are tax consequences, but they are manageable and better than any alternative out there.

If you attended a for-profit college and were misled to enroll, you could be eligible for for-profit student loan forgiveness options like Borrower Defense to Repayment. Over the last several years, over $1 billion in student loan debt has been forgiven for students who attended for-profit colleges or other schools that potentially misled students.

The reasons for student loan forgiveness include borrower defense to repayment claims, closed schools, and other lawsuits.

The Biden Administration has forgiven the most amount of student loan debt of any president, with several recent announcements helping over 200,000 borrowers.

However, figuring out if you qualify for loan forgiveness can be challenging. Here is the list of colleges that qualify for student loan forgiveness under borrower defense to repayment, the latest Sweet v. Cardona settlement, or other loan cancellation agreements with the Department of Education. You can also see this guide on How To Get Help For Your Loans If You Were Defrauded By Your College.

Borrower Defense Student Loan Forgiveness List

There are over 155 schools and colleges that potentially qualify for student loan forgiveness under various plans and settlements - the most recent being the proposed settlement of Sweet v. Cardona. However, many of the "owner" names don't match the college names. We're working to put the individual school names here on this list.

Note: Not all students for all years/schools will qualify. You still must meet the criteria for either borrower defense or closed school discharge. However, for some schools, all borrowers will qualify.

For example, Corinthian Colleges entered into a settlement, but the actual names of the schools are Everest, WyoTech, and others. As such, borrowers may not know if they qualify for programs.

For the list below, we list the parent company name, and then the list of affiliated schools. Some of these colleges may have previously been for-profit, but have since changed to non-profit educational institutions. 

Alta Colleges, Inc. (Westwood)

• Westwood College

American Commercial Colleges, Inc.

• American Commercial College

American National University

• American National University

Ana Maria Piña Houde and Marc Houde

• Anamarc College

Anthem Education Group (InternationalEducation Corporation)

• Anthem College
• Anthem Institute

Apollo Group

• University of Phoenix
• Western International University

ATI Enterprises

• ATI Career Training Center
• ATI College
• ATI College of Health
• ATI Technical Training Center

B&H Education, Inc.

• Marinello School of Beauty

Berkeley College (NY)

• Berkeley College

Bridgepoint Education*

• Ashford University*
• University of the Rockies*

Capella Education Company (StrategicEducation, Inc.)

• Capella University

Career Education Corporation

• American InterContinental University
• Briarcliffe College
• Brooks College
• Brooks Institute
• Collins College
• Colorado Technical University
• Gibbs College
• Harrington College of Design
• International Academy of Design and Technology
• Katharine Gibbs School
• Le Cordon Bleu
• Le Cordon Bleu College of Culinary Arts
• Le Cordon Bleu Institute of Culinary Arts
• Lehigh Valley College
• McIntosh College
• Missouri College of Cosmetology North
• Pittsburgh Career Institute
• Sanford‐Brown College
• Sanford‐Brown Institute
• Brown College
• Brown Institute
• Washington Business School
• Allentown Business School
• Western School of Health and Business Careers
• Ultrasound Diagnostic Schools
• School of Computer Technology
• Al Collins Graphic Design School
• Orlando Culinary Academy
• Southern California School of Culinary Arts
• California Culinary Academy
• California School of Culinary Arts
• Pennsylvania Culinary Institute
• Cooking and Hospitality Institute of Chicago
• Scottsdale Culinary Institute
• Texas Culinary Academy
• Kitchen Academy
• Western Culinary Institute

Center for Employment Training

• Center for Employment Training

Center for Excellence in Higher Education(CEHE)

• California College San Diego
• CollegeAmerica
• Independence University
• Stevens‐Henager

Corinthian Colleges, Inc.

• American Motorcycle Institute
• Ashmead College
• Blair College
• Bryman College
• Bryman Institutde
• CDI College
• Duff's Business Institute
• Eton Technical Institute
• Everest
• Everest University Online
• Everest College Phoenix
• Florida Metropolitan University
• Georgia Medical Institute
• Heald College
• Kee Business College
• Las Vegas College
• National Institute of Technology
• National School of Technology
• Olympia Career Training Instittue
• Olympia College
• Parks College
• Rochester Business Institute
• Sequoia College
• Tampa College
• Western Business College
• WyoTech

Computer Systems Institute

• Computer Systems Institute

Court Reporting Institute, Inc.

• Court Reporting Institute

Cynthia Becher

• La' James College of Hairstyling
• La' James International College

David Pyle

• American Career College
• American Career Institute

Delta Career Education Corporation

• McCann School of Business & Technology
• Miami‐Jacobs Career College
• Miller Motte Business College
• Miller‐Motte College
• Miller‐Motte Technical College
• Tucson College

DeVry

• American University of the Caribbean
• Carrington College
• Chamberlain University
• DeVry College of Technology
• Devry Institute of Technology
• DeVry University
• Keller Graduate School of Management
• Ross University School of Veterinary Medicine
• Ross University School of Medicine

EDMC/Dream Center

• Argosy University
• The Art Institute (including The Art Institute of Atlanta, The Art Institute of California, and more)
• Brown Mackie College
• Illinois Institute of Art
• Miami International University of Art & Design
• New England Institute of Art
• South University
• Western State University College of Law

Education Affiliates (JLL Partners)

• All‐State Career School
• Fortis College
• Fortis Institute

Edudyne Systems Inc.

• Career Point College

Empire Education Group

• Empire Beauty School

Everglades College, Inc.

• Everglades University
• Keiser University

FastTrain

• FastTrain

Globe Education Network

• Globe University
• Minnesota School of Business

Graham Holdings Company (Kaplan)

• Bauder College
• Kaplan Career Institute
• Kaplan College
• Mount Washington College
• Purdue University Global

Grand Canyon Education, Inc.

• Grand Canyon University*

Infilaw Holding, LLC

• Arizona Summit Law School
• Charlotte School of Law
• Florida Coastal School of Law

International Education Corporation

• Florida Career College
• United Education Institute

ITT Educational Services Inc.

• ITT Technical Institute

JTC Education, Inc.

• Gwinnett College
• Medtech College
• Radians College

Laureate Education, Inc

• Walden University

Leeds Equity Partners V, L.P.

• Florida Technical College
• National University College
• NUC University

Liberty Partners

• Concorde Career College
• Concorde Career Institute

Lincoln Educational Services Corporation

• International Technical Institute
• Lincoln College of Technology
• Lincoln Technical Institute

Mark A. Gabis Trust

• Daymar College

Mission Group Kansas, Inc.

• Wright Business School
• Wright Career College

Premier Education Group L.P.

• American College for Medical Careers
• Branford Hall Career Institute
• Hallmark Institute of Photography
• Hallmark University
• Harris School of Business
• Institute for Health Education
• Micropower Career Institute
• Suburban Technical School
• Salter College

Quad Partners LLC

• Beckfield College
• Blue Cliff College
• Dorsey College

Remington University, Inc. (Remington College)

• Remington College

Southern Technical Holdings, LLC

• Southern Technical College

Star Career Academy

• Star Career Academy

Sullivan and Cogliano Training Center, Inc.

• Sullivan and Cogliano Training Centers

TCS Education System

• Chicago School of Professional Psychology

Vatterott Educational Centers, Inc.

• Court Reporting Institute of St Louis
• Vatterott College

Wilfred American Education Corp.

• Robert Fiance Beauty Schools
• Robert Fiance Hair Design Institute
• Robert Fiance Institute of Florida
• Wilfred Academy
• Wilfred Academy of Beauty Culture
• Wilfred Academy of Hair & Beauty Culture

Willis Stein & Partners (ECA)

• Brightwood Career Institute
• Brightwood College
• New England College of Business and Finance
• Virginia College

How To Get Loan Forgiveness

There are two main programs that help here:

Borrower Defense To Repayment provides for the cancellation of a borrower’s federal student loans when the college violated federal or state laws or engaged in a substantial misrepresentation concerning the borrower’s student loans or the educational services paid for using the student loans. If a borrower qualifies for the borrower defense to repayment discharge, the borrower’s federal student loans will be cancelled and all previous payments refunded to the borrower.

Closed School Discharges: If a college closed while the student is enrolled or within 180 days of the student’s withdrawal, the student may be eligible for a closed school discharge of their federal student loans if they are unable to complete their education through a teach-out or by transferring credits to another school. 

It's important to remember that these loan forgiveness programs only apply to Federal student loans (such as the latest settlement with the Department of Education). If you have private student loans, there are no specific student loan forgiveness programs that can help. However, there have been various lawsuits and settlements to dismiss some private loans in connection with these schools.

Recently, Navient agreed to forgive $1.7 billion in private student loans for 66,000 borrowers who dropped out of for-profit colleges. Previously, Corinthian Colleges agreed to forgive private Genesis loans to borrowers who attended their schools.

Legal Updates

Several appeals have been filed since the Sweet v. Cardona agreement was approved, with borrowers feeling like they've been in limbo since 2022. 

In November 2022, the judge overseeing the case has approved the settlement agreement. However, the group that represented the schools has said it would appeal the case. 

In February 2023, the judge overseeing the case temporarily blocked loan forgiveness. However, by May, the 9th Circuit Court of Appeals allowed loan forgiveness to proceed.

By August 2023, the Education Department had instructed loan servicers to discharge the debt of over 128,000 class members. And more borrowers are starting to see their loans forgiven as a result.

In January 2024, the first class members started receiving their settlements.

In May 2024, the President approved loan forgiveness for $6.1 billion in federal student debt owed by 317,000 former Art Institutes students. 

What To Do Next

If you think you qualify, you should have been (or will be) notified by your loan servicer. However, if your contact information is not updated, you may not be.

As such, you should submit an application for the Borrower Defense To Repayment Discharge at studentaid.gov/borrower-defense/. 

Notice: There are a LOT of scams out there that are using these school names to get you to pay for help processing your student loan forgiveness claims. You don't have to pay - you can do this all for free via StudentAid.gov (which is a legitimate government website). Read our list of common student loan scams here.