1. What is Loan Forgiveness?

The loan forgiveness calculation estimates the amount that would be forgiven under Income-Driven Repayment (IDR) or Public Service Loan Forgiveness (PSLF) programs after making 120 qualifying payments (10 years).

2. How Does the Calculator Work?

The calculator uses the forgiveness formula:

Where:

• \( Balance \) — Remaining loan balance (USD)
• \( PMT \) — Monthly payment amount (USD)
• 120 — Number of qualifying payments (10 years)

Explanation: The equation calculates the difference between your remaining balance and the total amount you would pay over 120 months.

3. Importance of Forgiveness Calculation

Details: Understanding potential forgiveness helps borrowers evaluate repayment options and plan their financial future.

4. Using the Calculator

Tips: Enter your current loan balance and estimated monthly payment under an IDR plan. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What programs offer loan forgiveness?
A: Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) plans offer forgiveness after 20-25 years of payments (10 for PSLF).

Q2: Is forgiven amount taxable?
A: PSLF forgiveness is tax-free. IDR forgiveness may be taxable as income depending on the year and program.

Q3: What counts as a qualifying payment?
A: For PSLF: full, on-time payments while working full-time for qualifying employer. For IDR: payments under an approved plan.

Q4: Are there limitations to this calculation?
A: This is an estimate. Actual forgiveness depends on maintaining eligibility and program rules remaining unchanged.

Q5: Can forgiveness amount be negative?
A: No, the calculator shows $0 if your payments would exceed your balance before forgiveness.