As the June 27, 2025 deadline looms near, millions of American student loan borrowers are at a pivotal fork in the road that could make a huge impact in their financial futures. With average federal student loan debt standing at $38,375 per borrower as of the end of 2024, over 5 million Americans are racing against time to capture vital forgiveness before it disappears.
The critical June 30 deadline explained
The U.S. Department of Education has set June 27, 2025, as the hard deadline for applications for student loan forgiveness in the 2025 round. The deadline will be most important to those borrowers who want to become eligible for several various types of federal forgiveness plans, such as those under income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF).
For the typical borrower, this deadline is not simply a date on a calendar—it’s the difference between still owing tens of thousands of dollars or having that debt cut in half or wiped out altogether. Borrowers who blow this key deadline risk losing access to forgiveness benefits no longer to be available under future law.
Who is eligible for forgiveness before the deadline
Eligibility for 2025 forgiveness programs is based on some significant considerations. You can be eligible if:
- You possess federal student loans (Direct Loans, FFEL, or Perkins Loans)
- Have been making 10-20 years or more of qualifying payments under an IDR plan
- Earn full-time for a public service employer under the PSLF program
- Were forbearing or deferring under COVID-19 relief earlier
- Are on the new SAVE repayment plan
See that your personal student loans are excluded from these government forgiveness programs. Borrowers must also keep their income tax data and payment history current in the Federal Student Aid (FSA) system.
How to apply before deadline
You can apply for loan forgiveness prior to June 30 by simply following a few simple steps:
- Log into studentaid.gov using your FSA ID
- Proceed to the “Manage Loans” page and then select Loan Forgiveness
- Select the appropriate forgiveness program (IDR adjustment, PSLF, SAVE)
- Fill out the online form and upload any supporting documentation
- Submit and wait for approval
Experts strongly advise submitting early in order to prevent last-minute technical problems that might prevent your submission from being processed before the deadline.
Understanding your repayment options
If you’re not eligible for forgiveness immediately or require a plan pending forgiveness, there are certain repayment plans that can assist you in repaying your student loan debt.
- Standard Repayment Plan: The standard plan breaks your loan into even monthly payments paid over 10 years. This one reduces interest charges but comes with larger monthly installments. You’re put in this plan automatically when you start repaying unless you opt for something else.
- Income-Driven Repayment (IDR) Plans: IDR plans take your income and family size into consideration to make estimates of payments, therefore, they best suit high-income borrowers as opposed to debt. They offer the following plans:
- Income-Based Repayment (IBR): 10-15% payment of discretionary income with forgiveness after 20-25 years
- Income-Contingent Repayment (ICR): Income-based payments with forgiveness after 25 years
- SAVE Plan (formerly REPAYE): Offers lowest payments (5-10% of discretionary income) with potential forgiveness in 10-25 years. Under the SAVE Plan, if you earn $32,800 or less annually, your monthly payment may be $0. Additionally, undergraduate loan payments will be reduced in half beginning summer 2024.
- Extended and Graduated Repayment Plans: For borrowers who require smaller payments but do not want income-based payments:
- Extended Repayment: Spreads payments out to up to 25 years for borrowers with over $30,000 in federal loans
- Graduated Repayment: Begins with smaller payments that grow every two years for 10 years
Tax consequences to keep in mind
Perhaps most significant for borrowers applying for forgiveness is the tax consequence of canceled debt. Student loan forgiveness through December 31, 2025, does not need to be included as taxable income under federal law by the American Rescue Plan.
However, from 2025 onwards, the tax-exempt status of forgiveness can expire unless revived by future legislation. This offers another impetus for securing forgiveness before potential tax consequences become relevant again.
