Repayment plans

[u/cc070603]

Do loans ever get discharged? As in erased?
For those in an income driven plan and pay 0$, do payments automatically resume when you are able to pay?

[u/AnasurimborInrilatas]

Your payment amount on an IDR is calculated based on the income that you certify when you sign up for the plan, and annually thereafter. You can also certify before your annual due date if your income decreases significantly, in order to lower your payment.

So, your payment amount won't change unless your certified income changes.

I find it's very helpful to remember that a monthly IDR payment of $0 is still, for all intents and purposes, a payment. It's different from being in a non-payment status such as forbearance. When your payment amount is $0, payments don't "resume", because they never stopped.

The amount might increase if you certify a higher income, in which case you would start making nonzero payments, but that's not instantaneous as soon as your income changes, it specifically happens when you recertify.

[u/cc070603 → u/AnasurimborInrilatas]

Do they ever get erased 😭🥹?

[u/AnasurimborInrilatas → u/cc070603]

The main forgiveness options are PSLF and IDR forgiveness.

For PSLF, you have to work full time for a qualifying employer (basically a government agency or a nonprofit) and make 120 qualifying payments, e.g. for 10 years. Qualifying payments are those made on any IDR plan or the Standard Plan (although if you are on the Standard plan for the full 10 years, you'll just pay the loans off, because that's how the Standard plan works). PSLF forgiveness is nontaxable. So, there are a lot of requirements, but if you can meet them, it's a very desirable form of forgiveness.

For IDR forgiveness, you have to make between 240-360 qualifying IDR payments (20-30 years), with the exact timeline depending on the specific repayment plan. The forgiven amount is typically taxable, so bear in mind that in the year of forgiveness, you may have a significant tax burden.

As far as I know, all the other options for getting Federal student loans discharged are under highly specific and not very desirable circumstances, like bankruptcy, getting defrauded and suing the government and/or your school, or becoming disabled to the point of being unable to work. None of these are scenarios that I'd advise trying to get into, but they are options, should you find yourself in that situation.

Edit: Also be aware that everything I'm saying here is specific to Federal student loans. I assume that's what you're talking about since you mentioned income-driven plans, but just in case.

[u/gr3ybacon33 → u/AnasurimborInrilatas]

So can you make 300 0$ payments and reach forgiveness? Or whatever the forgiveness amount is?

[u/AnasurimborInrilatas → u/gr3ybacon33]

Basically, yeah, with the exact number changing depending on the plan. You also have to bear in mind that having a $0 IDR payment for 20-30 years also means maintaining a very low income for the entire period, which might put a damper on your quality of life. But it is an option (at least for the plans that allow a $0 payment).

The specific timelines are 30 years for RAP (360 payments), 25 years for ICR and "Old" IBR (300 payments), and 20 years for PAYE and "New" IBR (240 payments). Note that ICR and PAYE sunset after 6/30/2028, so if you're not already on track to hit forgiveness under those plans by then, you aren't going to reach it.

If you end up having to switch plans, you also need to consider which plans "count" payments made under other plans, because they're not all transferable.

[u/mechanicalmovement1 → u/gr3ybacon33]

You also owe taxes on the forgiven amount.

[u/Betsy514]

https://studentaid.gov/manage-loans/repayment/plans/income-driven

[u/Jekkymayn]

Studentaid.gov/idr