Student Loan Debt Relief & Repayment: The Latest Updates

If you’ve taken out loans to pay for your education, you’re likely eager to stay on top of student debt relief and what it means for you.

With regular policy changes and an ongoing evolution of student debt relief, it’s essential to stay on top of the latest news, including how the One Big Beautiful Bill Act (OBBBA) has impacted loan forgiveness. Navigating these changes can be complex, so we’re staying on top of the latest updates to ensure you have the most current information right here.

Key takeaways

• In 2024, additional debt relief was awarded for teachers, social workers, and other public servants who qualified for Public Service Loan Forgiveness (PSLF).
• Remaining student loan balances will be forgiven for individuals in income-driven repayment (IDR) plans who have paid the equivalent of 20 or 25 years of qualified payments.
• As of January 1, 2026,  student loan debt that’s been forgiven is no longer tax-free.
• The OBBBA has impacted annual and lifetime borrowing limits for undergraduate, graduate, and professional degrees beginning July 1, 2026.

2025 update on student loan forgiveness

On July 4, 2025, OBBBA introduced a notable change for loan forgiveness that will impact borrowers on a large scale: As of January 1, 2026, forgiven student loan debt is no longer tax-free.

With this change, your forgiven student loan debt will now be included in your taxable income, which could increase your tax bill significantly.

Who is eligible for loan forgiveness?

Borrowers who have federal student loans in income-driven repayment (IDR) plans and have accumulated the equivalent of either 20 or 25 years of qualified payments can receive loan forgiveness for the remaining balance.

However, the OBBBA mandated the creation of a new Repayment Assistance Plan (RAP), which will start July 1, 2026. This plan requires 30 years of payments before forgiveness can be granted.

What type of loans are eligible for forgiveness?

Borrowers eligible for forgiveness may include those with Direct Loans or Federal Family Education Loans held by the Department of Education (including Parent Plus loans of either type) who have reached the necessary forgiveness threshold as a result of receiving credit toward IDR forgiveness of any of the following periods:

• Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the type of loan, or the repayment plan;
• Any period in which a borrower spent 12 or more consecutive months in forbearance;
• Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance; 
• Any month spent in deferment (except for in-school deferment) prior to 2013; and
• Any month spent in economic hardship or military deferments on or after January 1, 2013.

In addition, the months described above that occurred prior to a loan consolidation will also be counted toward forgiveness.

What do I need to do if I am eligible for forgiveness?

Eligible borrowers don’t need to apply for forgiveness. Debt is automatically forgiven. The Department of Education automatically informs eligible borrowers via email.

If you are expecting student loan forgiveness under the Public Service Loan Forgiveness program, you must have made 120 qualifying payments and complete and submit a form requiring verification from your employer.

When did loan discharges begin?

Discharges began 30 days after email notifications were sent. For those who received forgiveness, repayment of your loan was paused until the discharge was processed.

Recent history of student loan forgiveness

Over the last few years, there have been several updates that have created major shifts in the landscape of student loan forgiveness, including:

Update: January 19, 2024: The Biden-Harris Administration announced an additional $4.9 billion in student debt relief for 73,600 borrowers. This additional debt relief went to teachers, social workers, and other public servants like firefighters and nurses who qualified for Public Service Loan Forgiveness (PSLF). This relief also included borrowers qualifying for income-driven repayment (IDR) forgiveness who were not being accurately accounted for.

Update: August 2023: President Biden and the Department of Education took steps to provide access to affordable payments through the Saving on a Valuable Education (SAVE) plan, which cut payments on undergraduate loans in half compared to other IDR plans and ensured borrowers’ balances don’t grow if they keep up on payments. A single borrower making less than $15 an hour will not be required to make payments.

Update: July 18, 2023: Two weeks following the Supreme Court striking down President Biden’s debt relief plan, the Biden-Harris Administration announced plans to provide 804,000 borrowers with $39 billion in automatic loan forgiveness. The Department of Education announced they will automatically discharge certain Federal student loans in income-driven repayment (IDR) plans as part of the plan announced by Biden-Harris in 2022.

Update: June 30, 2023: The Supreme Court blocked President Biden’s plan to forgive up to $10,000 in federal student loans used to pay for college and other post-secondary education and up to $20,000 for recipients of Pell Grants.

Update: June 14, 2023: The U.S. Department of Education announced that Congress passed a law that would prevent further extension of the student loan payment pause. As a result, student loan interest resumed starting on September 1, 2023, with payments due starting October 2023.

Update: November 22, 2022: The Biden-Harris Administration announced another extension to the payment pause on student loan payments to go through August 2023. The most recent extension of the pause was set to end Dec 31, 2022, but Biden’s one-time student loan forgiveness program was blocked, so the pause was extended again.

Update: October 21, 2022:  A federal appeals court temporarily blocked Biden’s student loan forgiveness plan following an emergency motion for an administration stay, which prohibited discharging any student loan debt under the cancellation plan.

Update: October 15, 2022: The Department of Education has begun beta testing the student debt relief website, where borrowers are able to submit applications for the Biden-Harris Administration’s student debt relief program.

Update August 24, 2022: President Biden, Vice President Harris, and the U.S. Department of Education announced a three-part student loan debt relief plan to help federal student loan borrowers following the pandemic. The three-part plan included an extension of the pause on student loan payments, debt cancellation, and a proposal to create an income-driven repayment plan to help lower future monthly payments.

What was included in the Biden-Harris Student Debt Relief Plan?

Student Loan Payment Pause

The historic student loan payment pause due to COVID-19 ended in 2023, with interest resuming on September 1, 2023, and payments restarting in October 2023. The payment pause included suspension of loan payments, set interest rates to 0%, and stopped collections on defaulted loans. Debt Cancellation

Borrowers employed by non-profit organizations, the military, or federal, state, tribal, or local government may be eligible to have all of their student loan debt forgiven through the Public Service Loan Forgiveness Program.

On June 30, 2023, the Supreme Court blocked President Biden’s plan to forgive up to $10,000 in federal student loans used to pay for college and other post-secondary education and up to $20,000 for recipients of Pell Grants, but certain Federal student loans in income-driven repayment plans were automatically discharged.

SAVE plan proposal and status

Under the SAVE plan:

• Borrowers are required to pay no more than 5% of discretionary income on undergraduate loans instead of 10% under most current income-driven repayment plans.
• The income requirement for repayment was raised, guaranteeing that borrowers making under 225% of the Federal Poverty Level (about the annual equivalent of $15 minimum wage) don’t have to make a monthly payment.
• Forgiveness for balances of $12,000 or less after 10 years of payments instead of 20 years.
• Cover borrowers’ unpaid monthly interest so that, unlike existing income-driven repayment plans, borrowers’ loan balances will not grow as long as they are making monthly payments.

After the passage of the OBBBA in July 2025, the SAVE plan is being phased out. Starting on July 1, 2026, the SAVE plan will be replaced by the new Repayment Assistance Plan (RAP), which extends forgiveness timeline to 30 years for new enrollees.

Other OBBBA updates that impact student loan borrowers

If you’re still repaying your loans, your repayment schedule is determined by your total loan balance. Under the new guidelines, you have between 10 and 25 years to pay off your debt.

If you plan to take out more loans, you should note some new limits under the OBBBA:

• A cap of $257,000 per person has been established for combined undergraduate and graduate loans.
• Starting in July 2026, graduate loans are limited to a total of $20,000 per year and $100,000 per lifetime.
• If you’re going to pursue a professional degree, there’s a borrowing limit of $50,000 per year and $200,000 for your lifetime.
• For those taking advantage of Parent PLUS loans, the annual limit is $20,000, and the lifetime limit is $65,0000 per student for loans starting in July 2026.

As you borrow and repay student loans, it’s important to stay on top of the latest policy changes. Regularly check back for updates to the TurboTax blog to ensure your financial plan remains on track.