Student Loan Forgiveness for Therapists

By Heard

This blog post was written by our sponsor, Heard, as part of a paid partnership with CEU Creations and CE4Less. While CEU Creations and CE4Less do not receive any commissions or fees from the sale of Heard’s services, we are sharing this content to provide helpful financial insights for mental health professionals. As always, please consult with a licensed tax professional for advice specific to your situation.

If student loan payments put a drain on your finances, you’re not alone: in one recent survey of self-employed therapists, nearly 60% said they had student loan debt. Of those, close to a quarter owed $100,000 or more.

The good news? Student loan forgiveness for therapists can wipe out that debt and put an end to those pesky payments.

But your chance at having your student loans forgiven depends on what type of loan you have, and may also depend on your employment history. And, due to changes introduced by the “One Big, Beautiful Bill” in 2025, the options for having student loans forgiven have become less favorable.

Here’s what you need to know about student loan forgiveness for therapists, how to apply, and recent changes to student loan forgiveness programs under Trump.

What are the different types of student loan forgiveness for therapists?

If you took out a student loan from a private lender, your chances of having the debt forgiven are very low. Aside from serious disability or death, private student loans are only forgiven in the event the courts determine you have been a victim of predatory lending practices.

Public student loans, on the other hand, offer multiple routes to forgiveness, namely:

• Loan forgiveness for Income-Based Repayment plan borrowers
• The Saving on a Valuable Education (SAVE) plan
• The Public Student Loan Forgiveness (PSLF) plan
• Discharge of Federal Perkins loans
• The Repayment Assistance Plan (RAP)

Loan forgiveness for IBR borrowers

If your student loan qualifies for the Income-Based Repayment plan, you can benefit both from lower payments and early discharge of the loan.

The types of loan that qualify for IBR are:

• Direct loans (both subsidized and unsubsidized)
• Federal Stafford loans (both subsidized and unsubsidized)
• PLUS loans made to students
• Consolidation loans (direct or Federal Family Education Loans (FFELPs)) that do not include PLUS loans made to parents

Your student loan payments are set based on your discretionary income—that is, your total income above 150% of the poverty line. 

If you qualify for IBR, the outstanding balance is forgiven after 20 to 25 years, depending on when you took out the loan. That being said, you may need to pay income tax on the amount forgiven.

One good thing about the IBR program is that you can qualify for it regardless of your employment history. In contrast, both the PSLF and the discharge of Federal Perkins loans require you to work for a government organization or a registered non-profit. 

The SAVE plan for therapists

The SAVE plan is now defunct due to a 2024 court decision. 

If you’re already enrolled in SAVE, you have until the end of June 2028 to switch your loans to a different program. Starting July 1, 2028, all borrowers enrolled in SAVE will automatically be switched to the new Repayment Assistance Plan (RAP).

In the meantime, starting August 2025, previously paused interest charges under SAVE have resumed. However, a general forbearance is still in effect, and payments are paused.

The PSLF for therapists

The PSLF program allows you to have your loan forgiven earlier than the IBR. And even if your loan is covered by the IBR program, you can enroll in PSLF—benefitting both from payments based on your discretionary income and PSLF’s early forgiveness.

The repayment plans that qualify for PSLF are:

• The 10-Year Standard Repayment Plan
• The IBR Plan
• The Income-Contingent Repayment (ICR) Plan
• The Pay As You Earn (PAYE) Plan
• The SAVE Plan

However, in order to qualify for PSLF, you must work for an eligible employer while you make 120 monthly payments. That’s 10 years if you make every payment, and longer if you do not. 

The 120-payment period does not need to be consecutive. With PSLF, you can work towards your 120-payment goal while working for different employers, or even if you take time off from working as a therapist. The important thing is the total number of months.

Eligible employers are limited to:

• US-based government organizations at the federal, state, local, or tribal level, including the US military
• Not-for-profit organizations exempt under Section 501(c)(3) of the Internal Revenue Code
• Certain other qualifying public services

There is one exception to the PSLF employment requirements: if you work for a private practice (including your own private practice), and through that practice: 

• You work as a contractor for a qualifying organization; and
• State laws prevent that organization from hiring employees directly to fill positions or provide services 

Then you may be able to qualify for the PSLF. 

In that case, you must provide the EIN of the qualifying organization and have an authorized official from the organization certify that you work or have worked for them.

Discharge of Federal Perkins loans

If you have a Federal Perkins Loan, you may be able to have it discharged incrementally while working in certain industries.

These industries include:

• Education
• Medical health care
• Law enforcement and other first responders
• The legal profession
• Nonprofits
• The military
• Services for people with disabilities

In most cases, you cannot qualify for the discharge of a Federal Perkins loan if you are self-employed.

RAP for therapists

As part of the “One Big, Beautiful Bill” being signed into law, RAP will replace SAVE. Borrowers will have access to RAP starting in 2026.

RAP is an income-driven repayment program, meaning that the amount borrowers pay is based on their income. In that way, it’s similar to IBR, but with less favourable terms. 

Some key details about RAP:

• RAP payments will be calculated based on adjusted gross income (AGI) rather than discretionary earnings (as with IBR and formerly with SAVE)

• RAP payments will be equivalent to 1% to 10% of a borrower’s income, depending on income level

• RAP will have a minimum monthly payment of $10 (SAVE allowed qualifying low-income borrowers to pay $0 per month)

• Under RAP, student loans will be forgiven after 30 years (in contrast to SAVE’s 20 or 25 years)

More information about RAP should emerge once the program becomes available.

How to apply for student loan forgiveness

The steps to apply for student loan forgiveness differ according to which program you belong to.

Loan forgiveness for IBR borrowers

You can use StudentAid’s Income-Driven Repayment (IDR) Plan tool to complete an application for IBR. 

Once you are registered, your loan payments will be based on your discretionary income, and your loan will automatically be forgiven after 20 or 25 years. After registering for IBR, you can also apply for the PSLF program.

The PSLF

To apply for PSLF, you must submit a PSLF form annually, or each time you change employers. You can complete a form online using the PSLF Help Tool. 

Each year you submit a PSLF form, StudentAid will send you a letter confirming the number of qualifying payments you have made. Once you reach 120 qualifying payments, StudentAid confirms your eligibility and works with your loan servicer to have the remaining balance forgiven. 

Discharge of Federal Perkins loans

To apply for the discharge or cancellation of a Federal Perkins loan, contact the school or the loan servicer that provided the loan. They will provide the application forms and instructions you need.

New student loan caps

The “One Big, Beautiful Bill” set new limits on the amount students can borrow.

There is now a $100,000 lifetime cap on student loans for graduate students. (The cap is $200,000 for medical students and students in law school.)

It also introduces new limits on borrowing for part-time students, and reduces opportunities for the forbearance or deferment of payments.

Also, there is now a $65,000 cap on Parent PLUS loans, and Parent PLUS loans taken out on or after July 1, 2026 will only be eligible for standard repayment plans.

How Heard can help

Heard is the only financial platform designed specifically for therapists in private practice. With done-for-you-bookkeeping and tax support, Heard helps you track your student loan payments and deduct interest from your taxes. Curious? Schedule a free consultation to learn more.

Key takeaways

• You may be able to reduce your monthly student loan payments by enrolling in the IBR plan or, starting in 2026, RAP

• The PSLF program and cancellation of Perkins Federal loans are limited to therapists working for qualified organizations

• SAVE is now defunct, and those enrolled in SAVE are being encouraged to switch to IBR. Otherwise, they will automatically be switched to RAP on July 1, 2028

• Details are still emerging about RAP, which is scheduled to become available in 2026

New student loan caps put lifetime limits on borrowing for graduate students

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