<p>That’s not as much of a surprise as some loan-payers get. If a student ends up paying 25 years on a payment plan other than standard 10-year repayment (it’s 20 years for PAYE repayment) and debt is forgiven, the amount of debt forgiven is taxable in the year it’s forgiven. This can be a whole bunch of money, and it really catches folks by surprise.</p>
<p>(For public service forgiveness, the forgiven balance is not taxable - for all other forgiveness, it is.)</p>