At 1st Ed, we believe that as an educator, you’re at your most effective when your focus is on students, not your taxes. As we enter the 2026 tax season, many student loan borrowers are facing a new landscape after changes to various federal tax exemption programs took effect at the start of the year. Now, it is more important than ever for educators and school employees to understand the potential impacts on their tax results, and to continue diligent pursuit of Public Service Loan Forgiveness (PSLF), which remains federally tax-free. Forgiveness of debts under the PSLF umbrella is still not considered taxable income, so it’s vital to stay organized in working toward a $0 balance.
The PSLF Readiness Checklist: A Guide for Educators and Beyond
Step 1: Confirm your Employer Certification
- Have you submitted your Employment Certification form in the last 12 months? Make sure you certify that you are working for a PSLF eligible employer when you submit your application for forgiveness.
- Ensure your HR department has signed your latest form (check digitally via the StudentAid.gov PSLF Help Tool)
Step 2: Verify your Repayment Plan
- Are you on an Income-Driven Repayment (IDR) plan? Standard or graduated plans often do not count toward your 120 qualifying payments.
- Verify if you are enrolled in the latest version of the SAVE plan to minimize your monthly interest.; the termination of this program does not take effect until 2028, so use it to your advantage when possible.
Step 3: Audit your Payments
- While making your 120 payments, make sure that you keep track of each payment. Log into your loan servicer and verify that their records match yours.
- If a payment was marked “Ineligible” due to a late fee or administrative forbearance, contact your servicer to appeal. Be sure to appeal any discrepancies immediately.
Step 4: Prepare for the “Tax Cliff” as 2026 Tax Season Changes Take Effect
- Consider Federal vs. State distinctions- while debts forgiven under PSLF are federally tax-free, ensure you are aware of Pennsylvania’s current stance on loan forgiveness as taxable income
- If you are nearing forgiveness, ensure that you have funds set aside to cover a potential tax hit
Don’t Wait!
Are you nearing your 120th payment? Plan ahead with 1st Ed Credit Union! With our range of options for flexible deposit accounts, competitive interest rates on loans (including Personal Loans and fee-free Balance Transfers) we’re here to help you get your finances in order. Don’t let high student loan payments keep you from bringing your financial goals within reach; find out how 1st Ed Credit Union can become your lifelong financial partner by applying for membership or calling to speak to our team at (717) 264-6506 today!