When Does Student Loan Forgiveness Happen?

Posted By Law Office of Simon Goldenberg, PLLC || 20-Sep-2017

Anyone who has graduated college within the last decade or so can tell you just how big of a burden student loans have become. While paying them off can take years and cost thousands, there are some options for relief, including the possibility of having all or a portion of your loans forgiven! A forgiven loan is one that has all or part of the balance cancelled at no penalty to the borrower. Sounds great, right? Read on to find out if you qualify, and if so, when it will begin.

Loan Forgiveness Programs

Here are just a few of the most common and popular student loan forgiveness programs:

  • Public Service Loan Forgiveness: Those who work in public-service careers could have the entire remaining balance of their student loans forgiven after holding a qualifying job for 10 years. Borrowers must be on an income-based repayment plan (usually from financial hardship) and have a strong history of making their payments on-time. After 120 payments (10 years), the rest of the loan is forgiven.
  • Teacher Loan Forgiveness: The Teacher Loan Forgiveness program only takes half the time, but has limits to how much actually be forgiven. How much you can be forgiven depends on what type of teacher you are, but those who receive the maximum relief can have up to $17,500 of their loans forgiven!
  • Perkins Loan Forgiveness: If you have taken out a Perkins loan (the program expired on September 30th of this year), and hold a position as a firefighter, police officer, librarian, or work in another qualify occupation, you may be eligible to have your loan forgiven after 10 years of service.
  • Income-driven Payment Plan Forgiveness: If you have suffered from a huge student loan debt burden in comparison to your income, you may qualify for having some of your loan forgiven. The Pay as You Earn program could help borrowers receive loan forgiveness on their remaining balance after 20 years of payments (240 total monthly payments). Those with federal loans which qualify for the REPAYE program could receive forgiveness after either 20 or 25 years.


Forgiveness on your student loans may seem great, but it’s a real downer when the tax man comes calling. Forgiven student loan debt is treated as income on your tax return for the year the loan is forgiven, and you’ll have to pay taxes on the amount taken out. For example, if you fall into the 25% tax bracket, and you have $10,000 in debt forgiven, you’ll have an extra $2,500 in tax burden to pay for the year. If you have $100,000 forgiven through this program, you’ll have to pay an extra $25,000 in taxes!

For more information about student loan forgiveness, talk to a New York debt relief attorney to discuss your options. Contact the Law Office of Simon Goldenberg, PLLC now!
Categories: Student Loan

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