Tax Bomb Alert for IDR Forgiveness

Federal student loan forgiveness is taxable again as of 2026. Borrowers approaching 20- or 25-year IDR forgiveness could face significant tax bills (e.g., $50K forgiven = ~$10K federal tax). PSLF remains tax-exempt. State treatment varies. A recent article clarifies that only IDR forgiveness is taxable; death/disability discharges remain tax-free. Borrowers should plan now.