May 17, 2021

Are Student Loans Forgiven After 20 Years?


Student loans are beneficial as these can provide financial support for students who can’t afford to attend college and have lower interest rates than other types of loans. However, paying for student loans can pose problems because, for one, it affects your debt to income ratio.

Fortunately, you can take advantage of student loan forgiveness, wherein you’re no longer required to repay all or some of your loans. If you’re wondering “When are student loans forgiven?” — you’re actually eligible after 20 or 25 years of qualifying payments, depending on the income-driven repayment or IDR plan. However, you need to meet a few requirements to ensure that your student loans are forgiven after 20 years.

What Are the 20-Year Student Loan Forgiveness Options?

The short answer to the question, “Are student loans forgiven after 20 years?” is yes, but you need to meet several requirements to qualify. The requirements you’ll have to comply with depend on the student loan forgiveness option you’re planning to take:

  • Revised Pay As You Earn (REPAYE) Plan: REPAYE is one type of income-driven repayment plan that forgives your remaining balance after 20 years of repayment and caps your federal student loan payments at 10% of your taxable income or discretionary income.
  • Pay As You Earn (PAYE) Plan: This repayment plan is ideal if you have loans for graduate school, are married to a high-earning spouse, and don’t expect to have any high income jumps in your current career.
  • Income-Based Repayment Plan (IBR): This repayment plan only applies to borrowers who applied for student loans after July 1, 2014.

Should You Take Advantage of 20-Year Student Loan Forgiveness?

The 10-year student loan forgiveness option is also available. Both of these options require you to be on an income-driven plan and keep your monthly payment amount at a minimum, but the 10-year student loan forgiveness requires you to work full-time under a qualifying employer.

When comparing the two options, the 10-year student loan forgiveness might seem like a better option as you’ll have to make payments within a shorter amount of time. The shorter the time frame you’ll have in repaying your student loan, the lesser interest rate you’ll acquire overall. Moreover, the 10-year student loan forgiveness will not also require you to pay any taxes on the forgiven amount.

However, the 10-year student loan forgiveness has strict career requirements that can prevent you from pursuing your interests or passions in the long term. Having strings attached just so you can have the 10-year student loan forgiveness requires commitment.

The 20-year student loan forgiveness is a better option if you don’t want to get tied to working in public service just to repay your loan. Besides, you’ll have better chances of earning more money when you’re not working in public service. The bigger your monthly income is, the easier it’ll be for you to manage your student loan debt.

Knowledge is Power

Student loan forgiveness can improve your financial health, especially if you belong to low-income households. Student loan forgiveness can also impact the economy because it helps millions of struggling individuals every year.

If you want student loan forgiveness, take some time to research more about the topic and reach out to experts for help. You need to acquire relevant information before applying for student loan forgiveness to fully understand its requirements and determine the pros and cons of such a program.

Let's make chippin' your student loans easier.
Start Now
Top half of an iphone mockup with the Chipper app