There are no federal grants that pay off existing student loans. What does exist is a set of forgiveness and repayment assistance programs that function like grants in practice: if you meet the conditions, the government, your state, or your employer erases part or all of your balance. The largest is Public Service Loan Forgiveness, which wipes out your remaining federal Direct Loan balance tax-free after ten years of qualifying work. Others target teachers, nurses, doctors, military members, and residents of specific states, and a growing number of employers now contribute directly to employee loan balances. Which programs you qualify for depends on your loan type, your job, and where you live.
Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is the closest thing to a grant that pays off student loans. After 120 qualifying monthly payments (about ten years) while working full-time for a qualifying employer, your entire remaining Direct Loan balance is forgiven, and the forgiven amount is permanently excluded from federal income tax.1Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness
Qualifying employers include federal, state, local, and tribal government agencies, the U.S. Armed Forces, and organizations with tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.2eCFR. 34 CFR 685.219 – Public Service Loan Forgiveness Program Full-time generally means averaging at least 30 hours per week. You must be working for a qualifying employer both when you reach your 120th payment and when you submit your forgiveness application.
Payments must be made under a qualifying repayment plan, which includes any income-driven repayment plan or the standard 10-year plan.2eCFR. 34 CFR 685.219 – Public Service Loan Forgiveness Program Only Direct Loans count. Older Federal Family Education Loans (FFEL) or Perkins Loans must be consolidated into a Direct Consolidation Loan first, though consolidating now can affect your payment count, so confirm the impact with your servicer before acting.3Federal Student Aid. What to Know About Federal Family Education Loan (FFEL) Program Loans
Income-Driven Repayment Forgiveness
Income-driven repayment (IDR) plans set your monthly payment based on your income and family size. After 20 or 25 years of qualifying payments, depending on the plan and whether the loans financed undergraduate or graduate study, any remaining balance is forgiven. You have to recertify your income and family size each year.4Federal Student Aid. Income-Driven Repayment Plans
One important change took effect at the start of 2026. The American Rescue Plan Act had temporarily excluded forgiven student loan balances from federal income tax for discharges between 2021 and 2025.5IRS. Instructions for Lenders and Loan Servicers Regarding Certain Discharged Student Loans That expired on December 31, 2025. If your IDR balance is forgiven in 2026 or later, the forgiven amount is generally treated as ordinary income and can trigger a substantial one-year tax bill. If you’re on track for IDR forgiveness, plan for that liability, and ask a tax professional about IRS insolvency relief, which can reduce or eliminate the tax owed if your total debts exceed your total assets at the time of discharge.
Availability of specific IDR plans has shifted with ongoing litigation. Check the Federal Student Aid website for the current list before enrolling or switching plans.
Programs Tied to Your Profession
Teachers
Teach full-time for five consecutive academic years at a qualifying low-income school or educational service agency, and you can receive up to $17,500 in forgiveness on your Direct Subsidized and Unsubsidized Loans.6Federal Student Aid. Teacher Loan Forgiveness The $17,500 maximum is reserved for highly qualified secondary math or science teachers and special education teachers. Other qualifying teachers can receive up to $5,000.7Office of the Law Revision Counsel. 20 USC 1078-10 – Loan Forgiveness for Teachers The same period of service can’t count toward both Teacher Loan Forgiveness and PSLF, so if you’re aiming at PSLF, using your first five years for the smaller benefit may cost you.
Nurses
The Nurse Corps Loan Repayment Program is aimed at nurses working at facilities with critical nursing shortages. It pays 30 percent of your outstanding nursing loan balance after year one, another 30 percent after year two, and an additional 25 percent for a third year, for a total of up to 85 percent.8Office of the Law Revision Counsel. 42 USC 297n – Loan Repayment and Scholarship Programs
Primary Care, Dental, and Behavioral Health Providers
The National Health Service Corps (NHSC) Loan Repayment Program pays providers who work at approved sites in Health Professional Shortage Areas.9Health Resources & Services Administration. NHSC Loan Repayment Program In exchange for a two-year full-time commitment (at least 40 hours per week, 45 weeks per year), primary care physicians, nurse practitioners, certified nurse midwives, and physician assistants can receive up to $75,000. Dental and behavioral health providers can receive up to $50,000 for the same commitment. Half-time options are available at reduced amounts.10Health Resources & Services Administration. Loan Repayment Programs for Health Careers
Military Members
Active-duty service members in designated specialties can receive loan repayment through the Department of Defense. Federal law authorizes 33⅓ percent or $1,500 of an eligible balance per year of service, whichever is greater.11Office of the Law Revision Counsel. 10 USC 2171 – Education Loan Repayment Program, Enlisted Members on Active Duty in Specified Military Specialties Individual branches often offer more under their own recruitment programs. Amounts and eligible specialties change often, so ask a recruiter or your branch’s education office for current figures.
State Loan Repayment Assistance
Most states run their own loan repayment assistance programs (LRAPs), typically aimed at healthcare providers, teachers, and attorneys who commit to working in the state, often in an underserved area, for two to five years. Awards range from a few thousand dollars a year to amounts on par with federal programs, and some states pay a lump sum while others pay in annual installments. Because these programs run on state appropriations, funding levels and eligibility rules change year to year, and some programs go dormant when budgets tighten. Your state’s higher education agency or professional licensing board maintains the current list and deadlines.
Employer Repayment Benefits
More employers now offer student loan help as a workplace benefit, in two main forms.
The first is a direct payment toward your balance. Through the end of 2025, Section 127 of the Internal Revenue Code let employers contribute up to $5,250 per year toward an employee’s student loans tax-free.12Office of the Law Revision Counsel. 26 USC 127 – Educational Assistance Programs That provision, added by the CARES Act in 2020 and extended several times, was scheduled to expire after December 31, 2025.13IRS. Frequently Asked Questions About Educational Assistance Programs Employers can still make those payments, but unless Congress has extended the exclusion, the payments may now count as taxable income to you. Ask your benefits office how it’s being reported.
The second is a retirement match tied to your loan payments. Under Section 110 of the SECURE 2.0 Act, employers can make matching contributions to your 401(k) or 403(b) based on your qualifying student loan payments, even if you’re not putting anything into the plan yourself. The provision took effect for plan years beginning after December 31, 2023.14IRS. Guidance Under Section 110 of the SECURE 2.0 Act With Respect to Matching Contributions Made on Account of Qualified Student Loan Payments The match rate has to be the same as for regular retirement contributions, and you certify to your employer each year that you made qualifying payments. Not every employer offers it yet, so check your plan.
What’s Taxable and What Isn’t in 2026
The tax treatment of forgiveness matters as much as the forgiveness itself. Permanently tax-free discharges include PSLF, borrower defense to repayment, closed school discharges, and discharges due to total and permanent disability or death.1Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness
IDR forgiveness is different. With the American Rescue Plan Act exclusion expired, forgiven IDR balances in 2026 and later are generally treated as ordinary income for federal purposes. On a large balance, that can push you into a higher bracket for the year and produce a bill big enough to plan for well in advance.
How to Apply
Each program has its own portal, but a few things are common to most applications: current loan statements from your servicer, your Adjusted Gross Income from line 11 of IRS Form 1040 for income-based eligibility (many applications pull this directly through the IRS Data Retrieval Tool),15IRS. Definition of Adjusted Gross Income and employment verification. For PSLF specifically, you’ll need your employer’s Employer Identification Number (EIN) from your W-2; an incorrect EIN is the most common reason an employer can’t be found in the PSLF database.16Federal Student Aid. Tackling the Public Service Loan Forgiveness Form – Employer Tips
For PSLF, use the PSLF Help Tool at StudentAid.gov to generate and submit the form. Submitting an employment certification annually, rather than waiting until year ten, lets you track qualifying payments and catch errors while they’re still fixable.4Federal Student Aid. Income-Driven Repayment Plans IDR enrollment and annual recertification also run through StudentAid.gov.17Aidvantage. Federal Student Loan Repayment Options Healthcare programs have their own portals and deadlines; the NHSC typically notifies applicants of their status by September 30.9Health Resources & Services Administration. NHSC Loan Repayment Program Keep copies of everything you submit.