Hardship Student Loan Forgiveness: What Are Your Options?

If you’re a student loan borrower facing financial hardship, you’re not alone. The Consumer Financial Protection Bureau reported in November 2024 that 63% of student loan borrowers have struggled to make payments, while 37% of borrowers have missed at least one payment. 

The good news for borrowers in financial distress is that there are a number of relief options available, although they require you to be communicative and proactive with your loan servicer. Here’s what you need to know about student loan hardship forgiveness and other relief options.

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Is there a hardship forgiveness program for student loans?

Though you might have read about proposed financial hardship student loan forgiveness in the news, these plans never came to fruition. The Department of Education officially withdrew the proposal for this kind of forgiveness in December 2024, stating that there were too many operational challenges to this type of relief. 

But this doesn’t mean there’s no path to hardship forgiveness. 

“Borrowers who experience long-term financial hardship can switch to an income-driven repayment plan, such as Income-Based Repayment,” says Mark Kantrowitz, student loan expert and author of “How To Appeal for More College Financial Aid.” 

“IBR provides forgiveness of the remaining debt after 20 or 25 years of payments, depending on whether the borrower's loans were all disbursed after or before July 1, 2014,” he explains. 

Other types of financial hardship may also qualify for immediate loan cancellation. 

“For example, if the borrower has a Total and Permanent Disability (TPD), they may be eligible for a TPD discharge of their remaining loan balance,” says Kantrowitz.

Income-driven repayment as a form of hardship relief

Changing your repayment plan could offer financial hardship relief, especially if you switch to an income-driven repayment (IDR) plan for your federal student loans.

“IDR bases the loan payment on a percentage of the borrower's income or discretionary income, as opposed to the amount they owe,” Kantrowitz explains. “Discretionary income is adjusted gross income minus a multiple of the poverty line, such as 150% of the poverty line. IDR yields a more affordable monthly payment.”

There are currently several IDR plans, including Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and the Saving on a Valuable Education (SAVE) Plan. However, all three of these plans will be phased out over the next few years due to recent legislation.

Borrowers who take out loans before July 2026 will continue to have access to the Income-Based Repayment (IBR) Plan, which bases your monthly payment on 10% to 15% of your discretionary income (depending on when you took out your loans), divided by 12. After 20 or 25 years of payments on the IBR plan, the remaining balance is forgiven.

Starting on July 1, 2026, borrowers facing financial hardship may also be eligible for the newly introduced Repayment Assistance Plan (RAP). Under RAP, your monthly payment is calculated based on your total adjusted gross income, divided by 12, and then reduced by $50 for each child you have. The minimum monthly payment is $10 on this plan. After 30 years of payments on RAP, the remaining balance will be forgiven.

Read More: What Credit Score Do You Need for a Student Loan in 2025?

Deferment and forbearance during financial hardship

When you’re having trouble making payments, deferment and forbearance each offer a way to pause federal student loan payments for a set period of time without going into default. But Kantrowitz cautions that “deferments and forbearances provide short-term financial relief, not forgiveness.”

Although deferment and forbearance both temporarily pause student loan payments, there are some important distinctions between these two processes. One big difference is that not all loan types accrue interest during deferment, while all loan types accrue interest during forbearance. Additionally, any accrued interest capitalizes after a deferment, but it doesn't capitalize after a forbearance.

Several deferment and forbearance options are available to borrowers in financial distress. 

“For right now, if you have a short-term financial hardship, you can get an unemployment deferment, an economic hardship deferment, or a general forbearance, limited to no more than three years in total duration,” explains Kantrowitz.

However, two of these options for pausing payments have been repealed for new borrowers. 

“Effective for borrowers who obtain a new loan on or after July 1, 2027, the economic hardship deferment and unemployment deferment have been eliminated,” says Kantrowitz.

This still leaves general forbearance as an option for future borrowers (and current borrowers may still access all three types of relief). But new borrowers who take out a loan on or after July 1, 2027, will be limited to a general forbearance of nine out of every 24 months, rather than the current limit of 12 months at a time for a cumulative limit of three years.

Discharge options available for extreme hardship

The Department of Education offers other options for canceling or discharging student loans. You may qualify in these situations:

• You're totally and permanently disabled.
• Your school closed.
• Your school misled you.
• You're a parent PLUS loan borrower, and any of the above situations apply to your child.
• You're the victim of a fraudulent loan.
• You've declared bankruptcy, and the court finds that repayment of your loan would impose undue financial hardship on you.
• The primary borrower passes away.

What to do if you don’t qualify for forgiveness right now

Communicating with your lender is your best option for getting financial relief, even if you don’t qualify for forgiveness. By alerting your loan servicer or lender to your financial difficulties, you can work together to find a solution that keeps your loan in good standing and your budget balanced. Some possible solutions might include:

• Switching to an income-driven or other repayment plan
• Applying for deferment or forbearance
• Getting a referral to a reputable debt counselor 
• Determining if you’re a good candidate for loan consolidation or refinancing

Check Out: How To Get Your Student Loans Out of Collections (2025 Guide)