Student Loan Repayment & Forgiveness for the Self-Employed
Paying off student loans when you’re self-employed can be challenging. While being your own boss has its rewards, your income can be unpredictable, which can make it tough to make monthly student loan payments.
Fortunately, there are programs that can help entrepreneurs and freelancers, including loan repayment plans and student loan forgiveness for the self-employed. Read on to learn about the different options, plus strategies to help you pay off your student loans faster.
Key Points
• Student loan borrowers who are self-employed may be able to take advantage of loan repayment plans and student loan forgiveness options.
• Income-driven repayment plans that typically reduce monthly student loan payments for those who qualify are one option to explore.
• While self-employed individuals generally are not eligible for Public Service Loan Forgiveness, there may be forgiveness programs in their state they qualify for.
• Freelancers and other self-employed people may be able to take the student loan interest deduction of up to $2,500.
• Setting up a budget to help set aside money each month for student loan payments can be helpful to keep borrowers on track.
Understanding Student Loan Repayment for the Self-Employed
When you take out student loans, you sign a Master Promissory Note (MPN), a legal document in which you promise to repay your loans, plus interest and fees.
You can log into your account at StudentAid.gov and review your student loan balance and other loan information on your dashboard. There, you’ll also find the name and contact information for your loan servicer, which is the company that disburses your loan, handles billing and payments, and can help you choose the best repayment plan for your situation.
For example, if you have federal loans, and you’re struggling with student loan debt, you might consider the Graduated Repayment Plan, where your payments start out low and rise approximately every two years.
Or you could explore an income-driven repayment plan to help lower your student loan payments.
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Income-Driven Repayment Plans for the Self-Employed
March 26, 2025: The SAVE Plan is no longer available after a federal court blocked its implementation in February 2025. However, applications for other income-driven repayment plans and for loan consolidation are available again. We will update this page as more information becomes available.Income-driven repayment (IDR) plans base your monthly federal loan student payments on your discretionary income and family size. Although applications for IDR plans were temporarily on hold beginning in mid-February 2025 after a federal court issued an injunction, as of March 26, online applications for three of the IDR plans are now available again. However, forgiveness through most of these plans remains paused.
There are four IDR plans:
• Income-Based: Payments are generally about 10% of a borrower’s discretionary income on this plan, and any outstanding balance is forgiven after 20 or 25 years. Note that on the IBR plan, forgiveness after the repayment term has been met is still proceeding at this time, since this plan was separately enacted by Congress.
• Saving on a Valuable Education (SAVE): As of March 2025, the SAVE plan is no longer available after being blocked by a federal court. Forgiveness has been paused for borrowers who were already enrolled in the plan and they have been placed in interest-free forbearance.
• Pay As You Earn (PAYE): A borrower’s monthly payment on PAYE is roughly 10% of their discretionary income, and they make 20 years of payments. As of March 2025, forgiveness has been paused. Borrowers who were already enrolled in the plan have been placed in interest-free forbearance since forgiveness has been paused.
• Income-Contingent Repayment (ICR): The monthly payment amount on this plan is either 20% of a borrower’s discretionary income divided by 12, or the amount they would pay on a repayment plan with a fixed payment over 12 years, whichever is less. The repayment term is 25 years. As of March 2025, forgiveness has been paused for this plan. Borrowers who were already enrolled have been placed in interest-free forbearance.
Student Loan Forgiveness Programs for Self-Employed Borrowers
There are no forgiveness programs specifically for borrowers who are self-employed or who work as freelancers. However, you might qualify for forgiveness under a broader federal plan or a state-based program.
Public Service Loan Forgiveness (PSLF) and Nonprofits
The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on a borrower’s federal Direct loans after they make 120 qualifying monthly payments under a qualified repayment plan while working for an eligible nonprofit or government agency. Unfortunately, self-employed individuals typically don’t qualify for PSLF because eligibility is based on working for a qualified employer.
It’s worth noting that in March 2025, President Trump signed an executive order to limit eligibility for PSLF and requested an update to the program’s regulations. The program remains unchanged for now, according to the Federal Student Aid website.
Income-Driven Repayment (IDR) Forgiveness
Typically, the remaining balances on eligible student loans are forgiven under IDR plans after a borrower makes a certain number of qualifying on-time payments over 20 to 25 years. But as of late March 2025, forgiveness has been paused on all of the IDR plans except IBR. (The IBR plan is excluded because it was enacted separately by Congress.)
You can find out more and get updates about IDR and forgiveness on the Federal Student Aid website.
State-Based Loan Forgiveness Programs for Entrepreneurs
Many states offer self-employed student loan forgiveness programs, typically for public service fields like health care, teaching, and law. Look into the professional association in your state or check your state’s government website for more information about programs that are available.
For example, if you have a law degree and you’re self-employed with your own practice, you can take advantage of statewide loan repayment assistance programs (LRAPs) in 24 states. You can reach out to your state’s bar association to learn more about specific loan forgiveness options you may be eligible for.
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Tax Considerations for Self-Employed Borrowers
As a student loan borrower and self-employed individual, you may be able to take the student loan interest deduction on your taxes. If you qualify for the full deduction, you can deduct student loan interest up to $2,500 or the total amount of interest you paid on your student loans, whichever is lower.
To be eligible for the deduction, you must meet the following criteria:
You paid interest on a qualified student loan during the tax year.
• Your modified adjusted gross income (MAGI) is less than a specified amount that is set annually.
• Your filing status is anything except married filing separately.
• Neither you nor your spouse can be claimed as a dependent on someone else’s return.
• You are legally required to pay the interest on a student loan.
Strategies to Pay Off Student Loans Faster When Self-Employed
In addition to loan forgiveness for the self-employed, student loan repayment plans, and state-based programs you may be eligible for, there are also techniques that can help you repay your loans faster. Here are a few to consider.
Budgeting and Setting Aside Funds for Loan Payments
Creating a budget and dedicating a set amount each month toward your loan payments can help you stay on track to pay them off. Once you look at the amount of income you have coming in, you may even be able to direct additional money to your loan principal, which could help reduce the amount of interest you owe over the life of the loan.
Using Business Income to Cover Student Debt
Generally, student loan payments cannot be used as a business expense deduction on your taxes. However, as discussed, you may be eligible for the student loan interest deduction. Additionally, the more income your business earns, the more you may be able to pay yourself, which means you could direct more funds to your monthly student loan payments.
Refinancing Options for Entrepreneurs
You might also consider refinancing your student loans. With a student loan refinance, you trade your existing loans for a new loan from a private lender. Ideally, you might qualify for a lower interest rate or better loan terms.
You can refinance both private and federal student loans. For instance, you could refinance health care student loans if you decide to pursue that option. However, it’s important to understand that if you refinance federal student loans, you’ll lose access to benefits such as IDR plans. Make sure refinancing is right for you before you move forward with it.
The Takeaway
There are repayment plans, student loan forgiveness, and loan assistance programs for those who are self-employed and working to repay their student loan debt. You can investigate income-driven repayment plans on the Federal Student Aid website and check with your state to find out about any forgiveness or loan assistance programs they offer to those in your field.
Also, you can also consider options that may help you pay off your loans faster, such as paying extra toward your loan principal and exploring student loan refinancing.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Can self-employed borrowers qualify for student loan forgiveness?
Self-employed borrowers may qualify for federal student loan forgiveness under income-driven repayment plans. You can find out about the available IDR plans at StudentAid.gov, and fill out an online application if you qualify. However, be aware that as of late March 2025, forgiveness on these plans is paused.
Your state might also offer student loan forgiveness programs, especially if you are in health care, teaching or law, among other professions. Check with the relevant professional association in your state and your state’s government website to find out more.
How does income verification work for self-employed repayment plans?
You must provide income verification to qualify for income-driven repayment plans. Proof of income includes your most recent federal income tax return or pay stubs.
What tax deductions are available for self-employed student loan payments?
You may qualify for the student loan interest deduction of up to $2,500 or the amount of interest you paid on your student loans during the year, whichever is less. Your modified adjusted gross income (MAGI) must be less than a specific amount that’s set annually, along with other eligibility requirements.
Are there any special loan repayment programs for entrepreneurs?
There are no special student loan repayment programs for entrepreneurs. However, your state may offer loan repayment or assistance programs you might qualify for. Check with any professional organizations you belong to for more information, as well as your state’s government website.
How can freelancers manage student loan payments without steady income?
Freelancers with inconsistent income can typically still take advantage of income-driven repayment plans, which can potentially lower your student loan payments. However, you will need to provide income verification, such as your most recent federal income tax return or paychecks, to see if you qualify
In addition, you can use other strategies to manage student loan payments, such as setting up a budget to help direct money to your monthly payments and claiming the student loan interest deduction on your taxes, if you qualify.
photo credit: iStock/Jacob Wackerhausen
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