My Student Loans Are Finally Being Forgiven. Could I Owe Taxes On Them?

I’m expecting to get my student loans forgiven soon. I’m at about $148,000. I borrowed $65,000 for a social work degree back in 2001 and I’ve paid something every single month since.A coworker mentioned you pay taxes on this and now I don’t know what to think. I make $58,000 a year. I’ve got about $14,000 in a retirement plan, $3,000 in savings, and other debt. I can’t afford to pay more taxes.Does this even apply to me? And is there something I should be doing before the end of the year?

Federal Student Aid posted its quarterly portfolio update on September 22, 2026, and the data through June 30 shows student loan defaults still rising. The number of borrowers with defaulted loans in the federally managed portfolio grew by about 400,000 during the quarter to more than 9.3 million. Those borrowers owe $234 billion, roughly 14% of the $1.64 trillion portfolio the Department of Education manages directly.That total now sits above the 9 million figure cited just last week when senators pressed the Education Department over its $1 billion servicing fund.The six-month trend is ugly. When FSA released its December 2025 numbers in March, 7.7 million borrowers held $180 billion in defaulted federal student loans. Compared with that report, the defaulted portfolio has added roughly 1.6 million borrowers and $54 billion in the first half of 2026.The overall portfolio tracked on the FSA Data Center now covers 42.3 million recipients and more than $1.7 trillion, up nearly 4% in dollars from June 2025, and student loan default accounts for a growing slice of it.

The 2027-28 FAFSA launches for everyone by October 1, 2026, and the beta version is already open. Parents working through the FAFSA step by step are reaching the signature page without ever seeing a question about savings, investments, or 529 plans. That’s on purpose.Nothing is missing and your application is not incomplete. Federal law says the Education Department “shall not use asset information” from families who meet one of three tests. A skipped section is not one of the FAFSA mistakes that cost families aid.

The University of Notre Dame will require SAT or ACT scores from undergraduate applicants beginning with the 2027-28 admissions cycle, the university announced on September 9. The requirement covers first-year and transfer applicants seeking to enroll in Fall 2028, which puts today’s high school juniors in the first affected class. Students applying this fall for Fall 2027 enrollment stay under the current test-optional rules.Micki Kidder, Notre Dame’s vice president for undergraduate enrollment, described a score as one input rather than a gate: “A test score, evaluated in full context of an applicant’s circumstances, is an additional measure to aid us in that process.”Applicants who face financial hardship, a lack of testing access, or a natural disaster can request a waiver without penalty. With the change, Notre Dame joins a growing number of selective schools that have already reversed course.

The University of Vermont announced on September 9 a Regional Tuition Break that drops annual tuition to $30,240 for incoming undergraduates who are permanent residents of Connecticut, Maine, Massachusetts, New Hampshire, or Rhode Island. UVM values the cut at more than $18,000 a year, or better than 35% off what non-residents normally pay at the school.The new rate starts with the fall 2027 entering class and applies to first-time first-year students and transfers. It covers 31 majors (close to a third of UVM’s undergraduate catalog) spread across the College of Agriculture and Life Sciences, the College of Education and Social Services, and the Rubenstein School of Environment and Natural Resources.Students must declare a primary major inside one of those three colleges and stay in it to hold the discounted rate, a condition that makes this less portable than the reciprocity agreements many families may be exploring.

American 15-year-olds tied for 10th out of 91 worldwide school systems in reading on the 2025 PISA exam, released September 8. In math, they tied for 23rd. Science was the bright spot for the U.S. at 13th.U.S. reading dropped 14 points from 2022. New York Times reporting puts that near the worst American result since PISA began in 2000.But it’s important to note that the general learning decline is worldwide. Reading across rich countries fell 28 points from 2015 to 2025, and math fell 22 points. One in five 15-year-olds now misses the basic skill level in all three subjects, up from 16% in 2022.More than 760,000 students took the test. About 4,600 were American, spread across 144 schools. Here’s where the U.S. stands.

How much should you have in a 529 plan? The short answer: about $96 a month from birth, or roughly $37,000 by the time your child is 18, if your goal is to cover a solid chunk of in-state tuition and fees.If you want to pay for everything at a public university, housing and food included, plan on about $630 a month gets you to $245,000 at 18. Everything in between helps, and so we break it odwn.The real trouble comes from rising tuition costs and how much every "college savings calculator" says you need to save for your child's education. According to The College Board, the average published price for 2025-26 is $11,950 in tuition and fees at a public four-year in-state college and $45,000 at a private nonprofit college. Add housing and food and the average total budget is $30,990 in-state and $65,470 private. Plug those into a calculator with a "pay it all" assumption and you're told to save $1,300 a month. Add that to your own retirement savings and there's nothing left.When you start plugging those numbers into the college savings calculator, suddenly you're supposed to start saving over $500 per month for your child. Then, add that into your own savings for retirement, and you're not going to have anything left for yourself each month!So let's dive in and see how much you should have in a 529 plan.

Sallie surveyed 511 U.S. scholarship applicants (both students who won at least one award and students who applied but never won) and published the results as The Scholarship Winner Playbook. The findings point to a short list of behaviors that consistently showed up among winners: starting early, applying in volume, getting essays reviewed, and reapplying after rejections. It’s a useful data set for anyone working through how to find college scholarships right now.The headline numbers: 63% of winners started applying during high school or earlier, about 1 in 3 winners (34%) collected 3 or more awards, and winners applied to roughly twice as many scholarships as non-winners. The number of scholarship applications you submit matters, which is one reason scholarship search websites that surface lots of matches quickly have become a standard part of the process.If you’re looking for a free tool to find college scholarships, check out The College Investor’s Scholarship Search Tool. Our team curates the scholarships listed.

The Federal Reserve’s G.19 consumer credit release published September 8 put outstanding student loan debt at $1,858.2 billion at the end of the second quarter of 2026. That is up $55.6 billion from $1,802.6 billion a year earlier, a 3.1% increase. This is also the first time the national student loan balance has gone above $1.85 trillion.Total consumer credit grew at a 4.2% seasonally adjusted annual rate in July to $5.19 trillion. Federally held consumer credit (Direct Loans, Perkins, and Ed-held FFEL) was $1,605.6 billion, roughly flat since March, even as millions of borrowers move onto new repayment plans.It’s important to remember that Q3 is typically when the federal balance sheet sees the biggest jump in student loan debt as fall enrollment hits the books.

Reps. Bill Foster (D-IL) and Brian Fitzpatrick (R-PA) introduced the Public Service Loan Forgiveness Inclusion Act of 2026, which would update what counts as a qualifying payment under Public Service Loan Forgiveness in two ways: it would let payments under graduated, extended, and the new tiered standard plans count during a borrower’s first 60 months, and it would treat months spent in administrative forbearance as qualifying payments for borrowers working in public service.It was referred to the House Committee on Education and Workforce the same day it was introduced, with nine cosponsors.This first provision is a win for many borrowers who’ve found themselves in the wrong repayment plan (especially graduated – which we’ve called a trap). These borrowers have seen their payment counts drop as a result.The second provision is especially important for the roughly 7 million borrowers who spent more than two years in the SAVE forbearance. Under current law, those months earn zero PSLF credit unless the borrower buys them back. Under this bill, they would count automatically, with no lump-sum payment and no application.