Is the remaining balance forgiven after 25 years of payments under the income contingent repayment plan?

The correct answer to your question is yes. You also must pay taxes on the amount forgiven. If you have FFEL loans instead of direct loans you need to go on the "income-based" repayment plan to get this benefit. Note that 25 years means 300 full payments; All months spent in deferment of forbearance DO NOT COUNT toward the 25 years.

Answer

Federal Direct Loans offers this option. Unfortunately, I don't know whether the borrower must pay taxes on the balance remaining after 25 years--if that's the case, I'd better start saving now. At least now I know that I won't die owing several million dollars in accrued interest. IMO it's much better to deal with them than with a private lender. Their in-school deferment options also seem more generous (I'm in a Ph.D. program, and received a 10-year deferment). See ed.gov direct loans

Here is a handy repayment calculator: ed.gov RepayCalc

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When you begin repayment, your lender "should" send you a repayment options form where you can choose from 4 types of repayment. If they do not, then write them and tell them which option you want.

If you select the income contingent repayment option, and still have a balance on your student loan after you've been paying on it for 25 years, you will be able to end the monthly payments and the amount that is remaining will need to be listed as income on that last year's income tax return.

So it is not really "forgiven", you just pay taxes on it instead of any more interest.

But, do you really want to pay interest for 25 years on a student loan? I don't think so.

First answer by R G. Last edit by Studentloanguy. Contributor trust: 39 [recommend contributor]. Question popularity: 190 [recommend question]