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Tax Exemption for Student Loan Forgiveness Ends 2025

10/23/2025

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Summary

Story summary

U.S. President Donald Trump’s administration confirmed that borrowers eligible for federal student loan forgiveness will not owe federal taxes on discharged loans for those in Income-Contingent Repayment or Pay as You Earn who have made qualifying payments for 20 to 25 years.
The Department of Education will resume processing these loans after an agreement with the American Federation of Teachers.
Borrowers in the SAVE plan must switch to another income-driven repayment plan by the end of 2025 to avoid potential tax liabilities.
The tax exemption is set to expire after 2025, raising concerns for borrowers awaiting loan forgiveness.

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Story summary

U.S. President Donald Trump’s administration confirmed that borrowers eligible for federal student loan forgiveness will not owe federal taxes on discharged loans for those in Income-Contingent Repayment or Pay as You Earn who have made qualifying payments for 20 to 25 years.
The Department of Education will resume processing these loans after an agreement with the American Federation of Teachers.
Borrowers in the SAVE plan must switch to another income-driven repayment plan by the end of 2025 to avoid potential tax liabilities.
The tax exemption is set to expire after 2025, raising concerns for borrowers awaiting loan forgiveness.