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Income-Driven Repayment Forgiveness

Who It’s For: Borrowers who sign up for one of the income-driven payment plans (such as income-based repayment, income-contingent repayment, Pay As You Earn, or REPAYE) and make eligible on-time payments for an extended period of time. This usually means 20-25 years, depending on which plan you use and other loan details.

How to Apply: You can use the income-driven repayment application to sign up for one of these plans, or you can apply online through your account at www.studentloans.gov. That said, this only puts you on the path to forgiveness; since it has been less than 20 years since the relevant payment plans were created, there is currently no process set in place to actually initiate the forgiveness process. There should be a new application put out by the Department of Education before the first loans become eligible for this option.

What Loans Qualify: Different payment plans are available for different payment plans, but most Direct or Federal Family Education Loan Program (FFELP) loans have at least one or two income-driven options available. Of these, the most difficult are probably Parent PLUS loans, which will only qualify if you consolidate them into the Direct Loan program first, then sign up for income-contingent repayment.

How Much?: The full remaining balance after you have made the required payments. Please note that the payments are based on your income and family size, so if your income is high enough, it is entirely possible to have paid the loan in full before any forgiveness comes into effect.

Anything Else I Should Know?:  20-25 years is a long time, and there are a lot of things that can set you back even further, such as if you wind up missing or postponing payments. It’s best not to think of this type of loan forgiveness as a goal, so much as a safety net – one hopes that you will eventually make enough money that you can afford to pay off the loan sooner than that, but if not, you can rest assured that the loan will still go away eventually, one way or another (assuming you have continued to make your payments).

It is also absolutely essential to renew your eligibility for these plans every single year, even if your income hasn’t changed. If a year goes by without re-certifying your income, your payment will be reset based on the loan size instead of your income – which can often result in a significant increase to your monthly payment amount.  We have more details about the various programs here.