Federal Student Loan Forgiveness Calculator
Enter your current loan, the forgiveness program, your monthly payment under that program, and your income. The calculator projects your balance to the forgiveness date and applies federal tax to the forgiven amount per IRC §108(f)(1) (PSLF, tax-free) or post-2025 IRC §108(f)(5) treatment (IDR, taxable).
Results
How forgiveness math works in 2026
Federal student-loan forgiveness in 2026 runs on four distinct clocks. Public Service Loan Forgiveness (PSLF) requires 120 qualifying payments while employed by a qualifying public-service employer; the discharge is permanently tax-free under IRC §108(f)(1). The three income-driven plans — IBR (300 months), PAYE (240 months, closed to new borrowers as of July 2024), and the new Repayment Assistance Plan (RAP, 360 months) created by OBBBA Pub. L. 119-21 §82001 — all forgive any remaining balance at the end of their clock, but the forgiven amount is federally taxable in tax year 2026 and later because OBBBA did not extend the temporary IRC §108(f)(5) ARPA exclusion that sunset December 31 2025.
The calculator projects your balance forward at your loan's interest rate against your monthly payment under the plan. When the IDR payment is below monthly interest (the typical PSLF/IDR scenario), the balance grows from negative amortization and the forgiven amount can be larger than today's balance. When the payment fully amortizes the loan before the clock ends, the loan pays off without producing a forgiveness benefit — this is why high-earner PSLF candidates often see no discharge.
Tax treatment — §108(f)(1) vs §108(f)(5)
- PSLF — tax-free under IRC §108(f)(1), in effect since 1984. Permanent statutory exclusion for work-contingent discharges. No federal tax owed on the discharge.
- IBR / PAYE / ICR / RAP forgiveness — federally taxable starting tax year 2026. The ARPA-era IRC §108(f)(5) exclusion sunset on December 31 2025, and OBBBA Pub. L. 119-21 (signed July 4 2025) did not extend it. A $200,000 discharge in 2026 on a $90,000 income produces roughly $44,000-$64,000 in federal tax depending on filing status.
- State conformity — most states conform to §108(f)(1), so PSLF stays tax-free at the state level too; a few states (Mississippi is the most-cited example) historically have not conformed. Verify your state treatment for any expected discharge.
RAP versus the legacy IDR plans
RAP (created by OBBBA §82001) is the only IDR option for new Direct Loan borrowers on or after July 1 2026. RAP uses a tiered AGI formula — 1% of AGI under $10,000, scaling up to 10% above $90,000 — divided by 12, minus $50 per tax dependent (children, not spouses), with a $10/month floor. Unlike legacy IDR plans, RAP includes a no-negative-amortization mechanic: any monthly interest in excess of the borrower's payment is waived rather than capitalized. This calculator implements the no-neg-amort branch for RAP as of the 2026-06-30 evening update — when your RAP payment is below monthly interest, your balance freezes at the starting value (so the full starting balance is what gets discharged at month 360, not an exponentially-grown amount). IBR / PAYE still use the legacy capitalizing straight-amortization projection because those plans do capitalize unpaid interest under HEA §455(d)(5).
Related calculators
- Student loan calculator — straight amortization for standard 10-year repayment
- Income-driven repayment calculator — IDR monthly payment estimator
- Student loan interest deduction calculator — IRC §221 above-the-line federal tax savings
- Student loan refinance calculator — federal-to-private refinance break-even
- Parent PLUS loan calculator — federal Parent PLUS amortization
- Grad PLUS loan calculator — federal Grad PLUS amortization
- Student loan snowball calculator — multi-loan payoff acceleration
Related reading
- How PSLF actually works in 2026 — deep-dive guide to the four pillars + OBBBA narrowing + Buyback + tax treatment
- How student loan repayment actually works in 2026 — overall federal-loan landscape post-OBBBA
- How to file taxes online in 2026 — online filing context for IDR forgiveness tax year
Frequently asked questions
What does this calculator estimate?
It estimates the dollar value of federal student-loan forgiveness under four programs: Public Service Loan Forgiveness (PSLF, 120 qualifying payments), Income-Based Repayment (IBR, 300 months), Pay As You Earn (PAYE, 240 months), and the new Repayment Assistance Plan (RAP, 360 months) created by OBBBA Pub. L. 119-21 §82001. For each program you enter your current balance, interest rate, monthly payment under the plan, and months already counted. The calculator projects your balance forward, computes the amount forgiven at the end of the clock, applies federal tax to the forgiven amount if applicable, and returns total program cost. PSLF forgiveness is permanently tax-free under IRC §108(f)(1). IDR-based forgiveness in tax years 2026 and later is federally taxable because OBBBA did not extend the temporary IRC §108(f)(5) ARPA exclusion that sunset on December 31 2025.
Is PSLF really tax-free?
Yes — PSLF discharges are excluded from federal gross income under IRC §108(f)(1), which is permanent statutory law (in effect since 1984), not the temporary IRC §108(f)(5) ARPA exclusion that expired December 31 2025. So a $185,000 PSLF discharge produces $0 federal tax. A handful of states historically did not conform to §108(f)(1) (Mississippi is the most-cited example), so verify your state treatment. This is structurally different from IDR-based forgiveness under IBR, PAYE, or RAP, which becomes taxable in tax year 2026 and later because OBBBA Pub. L. 119-21 (signed July 4 2025) did not extend the broader §108(f)(5) exclusion.
How does IDR forgiveness become taxable after 2025?
The American Rescue Plan Act of 2021 added IRC §108(f)(5), which temporarily excluded most types of student-loan discharge from gross income through tax year 2025. OBBBA Pub. L. 119-21 (signed July 4 2025) did not extend that exclusion, so it sunset December 31 2025. Beginning tax year 2026, federally forgiven IDR balances under IBR (25-year), PAYE (20-year), ICR (25-year), and RAP (30-year) are treated as ordinary federal taxable income in the year forgiven. A $200,000 balance forgiven on a $90,000 income would push the borrower into the 24-32% federal marginal bracket plus state tax. PSLF specifically remains tax-free because it sits under the permanent IRC §108(f)(1) exclusion, not the expired §108(f)(5).
What is the new Repayment Assistance Plan (RAP)?
RAP is the income-driven repayment plan created by OBBBA Pub. L. 119-21 §82001, replacing SAVE (which the Eighth Circuit struck down in Missouri v. Biden in February 2025). RAP becomes the only IDR option for new Direct Loan borrowers on or after July 1 2026. RAP uses a tiered AGI formula (1% of AGI up to $10,000; 2% up to $20,000; … 10% above $90,000) divided by 12, minus $50 per tax dependent (children, not spouses, per OBBBA §82001), with a $10/month floor. RAP has a 30-year (360-month) forgiveness clock and includes a no-negative-amortization mechanic — unpaid interest each month is waived rather than capitalized. This calculator implements the no-neg-amort branch: when the borrower's RAP payment is below monthly interest, the balance freezes at its starting value, so the full starting balance is what gets discharged at month 360 (not an exponentially-grown amount).
What counts toward the forgiveness clock?
A qualifying payment under 34 CFR §685.219 must be (a) the full scheduled amount, (b) made within 15 days of the due date, (c) on a Direct Loan, (d) under a qualifying repayment plan, and (e) for PSLF only, while employed by a qualifying employer (federal/state/local/tribal government or 501(c)(3) non-profit). A $0 IDR payment IS a qualifying payment when the borrower's AGI is low enough that the formula calculation produces $0 — this is explicitly confirmed by Federal Student Aid and is structurally the highest-leverage PSLF month because a month of $0 payment counts the same as a month of $1,000 payment toward the 120 count. The 2021-2023 Limited PSLF Waiver and the 2022-2024 IDR Account Adjustment retroactively credited millions of months that would not have qualified under the strict rule.