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Loan Forgiveness
Definition
Cancellation of remaining student loan debt after meeting specific conditions.
Explanation
Federal student loan forgiveness is available through IDR plans (after 20-25 years), PSLF (10 years), Teacher Loan Forgiveness, and other programs. Forgiven amounts under IDR may be treated as taxable income, though PSLF forgiveness is tax-free.
Strict adherence to program rules is required — missed certifications or wrong payment plans can disqualify years of progress.
Example
Borrow $100,000, make $350/month IDR payments for 20 years, remaining $40,000 is forgiven (may be taxed as income).