Income-driven repayment (IDR) forgiveness is an automatic benefit for borrowers who make consistent payments on qualifying plans.
IDR Forgiveness Timelines
- SAVE Plan: 20 years (undergraduate) or 25 years (graduate). Borrowers with original balances under $12,000 may qualify in as few as 10 years.
- PAYE: 20 years for all loans
- IBR (new borrowers after 7/1/2014): 20 years
- IBR (older borrowers): 25 years
- ICR: 25 years
Tax Implications
Under the American Rescue Plan Act of 2021, student loan forgiveness is not treated as taxable income through December 31, 2025. After that date, forgiven amounts may be taxable as income unless Congress extends the provision. This is a major consideration for anyone expecting a large forgiveness amount.
IDR Account Adjustment
The Department of Education conducted a one-time account adjustment in 2023-2024 that credited borrowers with additional qualifying payments, including periods of forbearance and certain deferments. This adjustment moved many borrowers significantly closer to the 20/25-year forgiveness threshold.
If you are on an IDR plan, check your payment count through your servicer or studentaid.gov. You may be closer to forgiveness than you realize.