It might seem like you have to jump through too many hoops to achieve student loan forgiveness. But wait until you see the math of your debt being wiped away.
Free online calculators can estimate your projected loan forgiveness months or years before you qualify. Although they won’t make the road toward debt cancellation easier, they might spur you forward.
Becoming eligible for student loan forgiveness
For some borrowers, calculating your projected loan forgiveness is easy and doesn’t require much math. Certain student loan forgiveness programs forgive flat amounts or a percentage of student loans.
For example, Perkins Loan cancellation is awarded on a percentage basis. You could have half or all of your Perkins Loans wiped away in five years or less, depending on your profession and circumstances.
For the more complicated types of loan forgiveness, though — like Public Service Loan Forgiveness (PSLF) and relief tied to income-driven repayment plans — calculators might come in handy.
Whether you qualify for PSLF is dependent on your field of work, your loans, and whether you make timely payments. You can confirm your eligibility by submitting an Employment Certification Form (ECF) to the Department of Education (DOE). Between 2012 and March 31, 2017, more than 960,000 ECFs were approved.
If you are on an income-driven plan, you can still have your loans forgiven. Unfortunately, it will take 20 or 25 years of payments to have your loans canceled.
Let’s review free online calculators that determine your projected loan forgiveness. Each can help you see how much you’ll pay in interest, when you can expect your debt to be wiped away, and how much you might owe in taxes on your forgiven loans.
1. StudentLoans.gov repayment estimator
This nifty tool from the DOE was designed to help you choose a repayment plan for your federal loans. It pumps out your projected loan forgiveness, too.
To start, you’ll need:
- Federal Student Aid ID
- Personal information
- Loan types
- Loan balances
- Interest rates
- Family size
- Adjusted gross income
- State of residence
The estimator takes this information and show your payment details for nine different repayment plans, from standard and graduated plans to income-driven plans.
For each plan that is eligible for loan forgiveness, you’ll be able to see how much relief you can receive and how long it will take to earn.
A Michigan resident earning less than $50,000 in salary while dealing with $34,722 in private school debt, for example, could receive varying levels of forgiveness after making a decade’s worth of payments:
The tool assumes that you’re eligible for PSLF. It also assumes that:
- You’re just beginning repayment
- Your family size won’t change during the life of your loan repayment
- Your income will grow by 5 percent annually
- Your interest rate won’t change
Any changes in your life, such as growing your family or your salary significantly, will blow up these assumptions and affect how much relief you could receive down the road.
The DOE’s estimator is best suited for borrowers just entering repayment. If you’re already months into paying down your debt, the repayment figures might be less accurate, as will your projected loan forgiveness.
A borrower who has paid off $5,000 of a $20,000 loan under standard repayment, for example, might see inaccuracies for their loans under income-driven repayment plans. The total amount paid — and the total that can be forgiven — might be off.
Like all calculators, this one is designed to be used by many borrowers. That’s why it makes assumptions. For the most accurate telling of your loan situation, check in with your loan servicer.
2. Student Loan Hero PSLF calculator
Our calculators make the same assumptions with one significant exception: You can plug in your own rate of salary growth. We suggest 3.5 percent, which is based on historical data, not the DOE’s 5 percent figure.
You might find yourself entering in a smaller or larger annual increase based on your career prospects. A teacher with guaranteed, incremental raises, for example, should be able to more accurately guess their future salary.
Our PSLF calculator is below. Use it to see how PSLF can help erase your debt.
Public Service Loan Forgiveness Calculator
3. Student Loan Hero repayment plan calculators
If you’re ineligible for PSLF, we still make it easy to project your loan forgiveness. There are calculators for estimating relief associated with these income-driven repayment plans:
- Income-Based Repayment (IBR) calculator
- Income-Contingent Repayment calculator
- Pay As You Earn (PAYE) calculator
- Revised Pay As You Earn (REPAYE) calculator
Under these repayment plans, your projected loan forgiveness would arrive after 20 or 25 years of making payments.
If you owe $35,000, for example, switching from a Standard Repayment Plan to an IBR plan would cost more over a longer period. You’d pay more in interest over time in exchange for smaller monthly payments.
Use the calculator below to see how IBR will affect your monthly payments and how much you can have forgiven.
INCOME BASED REPAYMENT (IBR) CALCULATOR
4. Federal income tax calculators
Thankfully, there won’t be a tax hit for your projected loan forgiveness through PSLF or student loan forgiveness for teachers. But Uncle Sam will come calling after you take advantage of other forgiveness programs.
There aren’t online tools for estimating how much you’ll pay in taxes for loan forgiveness, but you can do some simple math to understand how your loan forgiveness will be taxed. If you earn $30,000 in a year and have a $30,000 student loan debt canceled in the same year, the IRS will tax you as if you earned $60,000.
Once you have your new income, as unfair as it might seem, you can plug it into any number of free online income tax calculators. SmartAsset’s will pump out your tax burden based on your income, location, and filing status. You can also use these calculators from H&R Block and TurboTax.
The tax on your forgiven loan balance isn’t ideal. But it only dampens your situation if you don’t plan for it, so be prepared.
Why your projected loan forgiveness matters
Student loan borrowers are usually trying to get out in front of something bad, such as a late payment or a defaulted loan. But looking ahead to student loan forgiveness can make you feel better about your debt.
Although forgiveness could be years away, seeing the number itself might inspire you to work toward it. So get moving. Give these tools a spin to see what your future holds. It might be rosier than you imagined.
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