20 & 25 Year Student Loan ForgivenessJanuary 31, 2022
If you’re paying back student loans and are eager for the day that you’ll be done with this debt, you may be interested in the rules for loan forgiveness after 20 years or 25 years. The good news is, if you have federal student loans and enter into specific types of repayment plans, 20 year student loan forgiveness or 25 year student loan forgiveness is possible.
Here’s what you need to know to understand how loan forgiveness works and what you’d need to do to become eligible for it.
20 & 25 Year Student Loan Forgiveness Options
Do student loans get forgiven after 25 years? It depends on what types of student loans you have. Student loan forgiveness after 20 years or after 25 years is an option if you have certain federal student loans including:
- Stafford loans
- Grad PLUS loans
- Consolidation loans
If you have qualifying loans, you must also sign up for an income-driven repayment plan. Depending on the specifics of your plan, your payment will be capped at a specific percentage of your income. Once you have made the required payments for either 20 or 25 years — depending, again, on which plan you choose — the remaining balance of your loans is forgiven.
Income Driven-Repayment Plans
Student loan forgiveness after 20 or 25 years is an option only if you choose an income-driven payment plan for your eligible federal loans.
There are four options for income-driven repayment that could potentially result in loan forgiveness after 20 years or after 25 years. These options include:
- Revised Pay As You Earn (REPAYE): This limits payments to 10% of discretionary income. Any remaining loan balance will be forgiven after 20 years if all loans were for undergraduate study or after 25 years if you took out any graduate school loans.
- Pay as You Earn (PAYE): This limits payments to 10% of your discretionary income but payments cannot exceed what you’d owe under the Standard Repayment Plan. Any remaining loan balance will be forgiven after 20 years.
- Income-Based Repayment (IBR): If you’re a new borrower after July 1, 2014, this caps payments at 10% of discretionary income and payments cannot exceed the amount due under the Standard Repayment Plan. If you borrowed before July 1, 2014, payments are limited to 15% of discretionary income with the same payment cap. 20 year student loan forgiveness is available if you were a new borrower after July 1, 2014; otherwise, your remaining balance will be forgiven after 25 years.
- Income-Contingent Repayment (ICR): This limits payments to the lesser of 20% of discretionary income or the amount you’d owe on a repayment plan with a fixed 12-year repayment period, adjusted based on income. Loan forgiveness is available after 25 years.
So what happens to student loans after 20 years or after 25 years? Any remaining loan balance that remains unpaid at the end of your repayment period will be forgiven and you will no longer have to repay it.
20 Year Student Loan Forgiveness Options
If you are interested in 20-year student loan forgiveness, you must choose one of the following repayment plans for your eligible federal student loans:
- Revised Pay As You Earn: This offers loan forgiveness after 20 years but only if all of your loans were for undergraduate study. During the 20 years when you’re paying loans, monthly payments will be capped at 10% of discretionary income.
- Pay As You Earn: This offers loan forgiveness after 20 years to all eligible borrowers. Your payment equals 10% of your discretionary income during the 20-year period but can’t be higher than what you’d owe under the standard repayment plan.
- Income-based repayment: This offers 20 year student loan forgiveness if you were a new borrower after July 1, 2014. If you meet this criterion, your payments will equal 10% of discretionary income with a maximum payment equal to the amount you’d owe under the standard repayment plan.
25 Year Student Loan Forgiveness Options
If you are hoping for loan forgiveness after 25 years, your options include:
- REPAYE if you have graduate school loans.
- Income-Based Repayment if you have loans you took out before July 1, 2014.
- Income Contingent Repayment: This requires you to make payments totaling the lesser of 20% of discretionary income or the payment that would be due on a loan with a fixed 12-year payoff schedule, adjusted for income.
So do student loans get forgiven after 25 years? Only if you have chosen one of these repayment plans for eligible federal loans.
Can Student Loans Be Forgiven After 10 Years?
If you are interested in a faster option to wipe out student loans instead of waiting for loan forgiveness after 20 years, there’s only one solution available. You will need to qualify for Public Service Loan Forgiveness.
To qualify for PSLF, you must work full-time for a qualifying non-profit or for the government. You must make a total of 120 on-time payments on an income-driven plan while remaining with an eligible employer during the entire repayment period.
This is your only option to have loans forgiven after such a short period of time. Otherwise, you will need to wait for 20 year loan forgiveness or loan forgiveness after 25 years. Public Service Loan Forgiveness is also available only for eligible federal loans, just as forgiveness based on completion of an income-driven plan is limited to loans issued by the Department of Education.
Tips for Paying Off Student Loans Faster
While 20 year student loan forgiveness or 25 year student loan forgiveness may seem attractive, the reality is that you will pay a lot of interest over many decades if you take this approach.
If possible, it may be better to explore ways to pay off student loans faster rather than hoping for loan forgiveness. Some of the different techniques to pay off student loans faster include:
- Restricting borrowing only to loans you need to pay for your education
- Choosing the payment plan with the shortest loan repayment timeline that’s affordable
- Living on a budget that prioritizes loan repayment
- Making payments as soon as possible, including paying interest while in school if you can
- Making extra payments above the minimum
- Claiming the Student Loan Interest Deduction
- Looking for a job that offers student loan repayment assistance
- Refinancing student loans
There are many benefits of refinancing student loans, which can make this technique the ideal option. You can choose a different repayment plan and hopefully reduce your interest rate. If you pay less in interest, each payment will reduce your balance by a larger amount so it becomes easier and cheaper to become debt-free.
Refinance Your Student Loans With ELFI
If you’re interested in paying student loans off ASAP and don’t want to wait decades for loan forgiveness, you can refinance your student loans with ELFI.* ELFI offers affordable interest rates, a choice of refinance loan options, and you will have a personal loan advisor to guide you through the process of finding the right loan for you.