If it seems like federal student loan forgiveness news changes constantly, you’re not imagining it! With so many updates, it’s easy to feel unsure about what comes next. That’s why staying informed, taking steps to manage your loans, and talking with a student loan counselor can make the whole process easier to navigate.
Updates on Loan Forgiveness
Here’s a quick look at important changes.
- Repayment programs have changed. The Saving on a Valuable Education (SAVE) plan has been discontinued, and other income-driven plans have been suspended, but borrowers can transition to new options. The good news: multiple pathways to forgiveness remain.
- Paused SAVE loans are accruing interest. Loans under SAVE, which were paused during legal challenges, began accruing interest again on August 1, 2025.
- The Repayment Assistance Plan (RAP) will launch in 2026. RAP, a new income-driven plan that caps monthly payments based on income, will replace older repayment plans while still offering a path to forgiveness.
- Your past payments still count. If you were on an older repayment plan working toward forgiveness, the good news is that your qualifying payments will still count toward forgiveness under the new system, including RAP.
- The Public Service Loan Forgiveness (PSLF) Program continues. Public service workers can still qualify for forgiveness even after RAP starts. However, proposed rule changes may affect which employers qualify.
- Delays and uncertainties exist. Legal challenges, system updates, and temporary pauses have slowed the processing of some forgiveness applications, so it may take longer than expected for some borrowers to receive a decision. In the meantime, they need to keep making required payments.
- Future loan forgiveness may be taxable. Currently, forgiven federal student loans are tax-free through December 31, 2025. Any amounts forgiven after that date could be treated as taxable income unless Congress extends the exemption.
What You Can Do
Here are steps you can take to stay on top of your loans and protect your finances.
- Keep in touch with your loan servicer. Your servicer is the best way to confirm your plan details, track your progress, and ensure qualifying payments are properly recorded.
- Check the official source. Visit studentaid.gov for guidance on federal student aid and forgiveness programs.
- Beware of scams. Forgiveness programs are always free through the U.S. Department of Education. Anyone promising faster results for a fee is not legitimate.
- Review your repayment plan and explore your options. Make sure your monthly payments fit your budget and long-term goals. If they don’t, use the U.S. Department of Education’s Loan Simulator to explore your federal repayment options, or talk with a student loan counselor for personalized guidance. Californians can contact the Student Loan Empowerment Network for help with repayment options and forgiveness eligibility.
- Simplify with caution. Federal loan consolidation can streamline your payments and make you eligible for new programs like RAP. However, if you are considering refinancing with a private lender, be aware that you will lose access to all federal benefits, including income-driven repayment and forgiveness programs like PSLF.
- Stay organized. Keep copies of applications, payment records, and communications with your loan servicer.
- Plan ahead for taxes. Even though forgiveness is currently tax-free, setting aside a cushion can help you be prepared if Congress does not extend the exemption past the end of 2025.
Reach Out for Help
Excite Credit Union Members can schedule free, one-on-one sessions with student loan counselors from BALANCE.
Your counselor will:
- Conduct a thorough budget analysis of your income, expenses, and debt obligations.
- Provide a comprehensive review of your federal student loans.
- Evaluate which repayment and/or postponement options you may be eligible for.
- Determine how to address defaulted student loans, if applicable.
- Determine whether consolidation is a good option, if applicable.
- Provide recommendations for addressing federal student loans and specific next steps to get you started—based on your cash flow and goals.
With Excite CU and BALANCE, you can feel confident and in control of your financial journey—including your student loans—one step at a time.
