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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 first disbursed before July 1, 2026, 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
Income-driven repayment (IDR) plans base your monthly federal student loan payments on your discretionary income and family size. Beginning July 1, 2026, the federal student loan repayment system was significantly simplified. Existing borrowers generally have until July 1, 2028, to transition from certain older repayment plans to the new Repayment Assistance Plan (RAP) or another eligible repayment plan, depending on their loan type.
Current IDR options include:
• Income-Based Repayment (IBR): IBR remains available for eligible borrowers with loans made before July 1, 2026. 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 of qualifying payments.
• Repayment Assistance Plan (RAP): Available beginning July 1, 2026, RAP is the new congressionally authorized income-driven repayment plan. Monthly payments are based on adjusted gross income and the number of dependents rather than discretionary income. The plan also limits unpaid interest from growing and includes a principal-matching benefit for many borrowers. Any remaining balance is generally forgiven after 30 years of qualifying payments.
• Saving on a Valuable Education (SAVE): As of March 2025, the SAVE plan is no longer available after being ended by a federal court. Following federal court action and subsequent legislation, borrowers enrolled in SAVE must transition to another eligible repayment plan, such as RAP or IBR, according to the Department of Education’s transition timeline.
• Pay As You Earn (PAYE): PAYE is being phased out. No new loans made on or after July 1, 2026, are eligible for the plan, and borrowers currently enrolled must transition to another eligible repayment plan by July 1, 2028, unless they leave the plan earlier.
• Income-Contingent Repayment (ICR): ICR is also being phased out for most borrowers. Existing participants may remain in the plan temporarily but must transition to another eligible repayment plan, generally by July 1, 2028.
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.
As of 1 July, 2026, legislation updated the PSLF program, narrowing the definition of a qualifying employer while keeping its core requirements the same.
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. For borrowers enrolled in IBR, forgiveness is generally available after 20 or 25 years, depending on when the loans were first borrowed. The new RAP, which became available on July 1, 2026, provides forgiveness after 30 years (360 qualifying monthly payments). The SAVE, PAYE, and ICR plans are being phased out under the new law, with borrowers generally required to transition to another eligible repayment plan by July 1, 2028.
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 such as health care, teaching, and law. Look into the relevant 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 may be able to take advantage of statewide loan repayment assistance programs (LRAPs) in some 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.
💡 Quick Tip: Refinancing comes with a lot of specific terms. If you want a quick refresher, the Student Loan Refinancing Glossary can help you understand the essentials.
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.
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. Your state might also offer student loan forgiveness programs, especially if you are in health care, teaching, or law, among other professions. Compare available repayment options and apply online through StudentAid.gov, or 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 verification of your income 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?
As a self-employed person, 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 whether 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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