Foster parents take on work the state would otherwise have to pay for, and a lot of them are doing it while still carrying student debt. So the question comes up constantly: is there a student loan forgiveness program for foster parents?
The honest answer is no. There is no federal program that forgives student loans because you are a licensed foster parent. There never has been. Federal Student Aid's full list of forgiveness and discharge options has no foster care category, and the state programs that use the words "foster care" are almost always aimed at people who were in foster care as children — not the adults raising them.
What does exist is a set of programs you can qualify for through your job, your tax return, and the repayment plan you choose. Several of those changed in a big way on July 1, 2026, so anything you read about this before then is out of date.
Here is what actually applies.
Public Service Forgiveness Program
PSLF is the biggest one, and it is employment-based, not fostering-based. If you work for a state or county child welfare agency, a 501(c)(3) foster care or family services agency, a school district, or any other government or qualifying nonprofit employer, you can have your remaining Direct Loans forgiven after 120 qualifying payments.
Other qualifications for becoming eligible for the PSLF are :
- Full-time employment with a qualifying employer
- PSLF only applies to Direct Loans but not lona programs like the Perkins Loan unless you consolidate them into a Direct Consolidation Loan
- On-time payments made on or no later than 15 days after the payment due date each month
- The 120 qualifying payments do not have to be consecutive - an example would be if you were at one point working for an organization that was not considered a qualifying employer. You however need to reach 120 qualifying payments with a qualifying employer to be eligible.
If you think this is a program that would benefit you, you should fill out this form to determine your eligibility
Federal Perkins Loan Cancellation
If you don’t qualify for the PSLF, another program you can take advantage of is the Federal Perkins Loan Cancellation.
This program was designed to ease the burden of student loan repayments on public servants. If you work in any of the following public service positions, you could qualify for the Federal Perkins Loan Cancellation program.
- Firefighter
- Faculty member in a tribal college or university
- Librarian with a master’s degree in library science at a school that qualifies for Title 1 funding or a public library
- Teacher - special education teachers, math/science teachers, bilingual teachers or teachers in fields where there is a shortage and teachers who teach disabled children in a public schools
- Speech Pathologists with a master’s degree working in a Title 1-eligible school
- Medical Technician
- Full-time emoyee of eligible public or private nonprofit child or family service agency which directly provides services to high-risk children (people under the age of 21 who have suffered emotional or physical abuse/neglect or children with severe mental or behavioral disturbances) from low-income families or communities
- Full-time staff member in a pre-kindergarten or child-care program, or in the educational part of a preschool program carried out under the Head Start Act
- Police/Corrections Officer
- Member of the Peace Corps/Americorps/VISTA programs
- United States Armed Forces
Under the Federal Perkins Loan Cancellation program, as long as you qualify, up to 100% of your loan can be cancelled over a period of 5 years.
The catch to this program is that the college you attended is the entity that deems you eligible to receive the benefit.
To find out more information about how to get the process started with this program in particular, we highly recommend you call or visit your school’s bursar’s office or the financial aid office.
Loan repayment programs for child welfare and behavioral health work
A lot of foster parents also work in social services. If that is you, state and federal loan repayment programs are usually worth more per year than anything else on this list.
The National Health Service Corps covers behavioral health clinicians — LCSWs, licensed professional counselors, psychologists, and marriage and family therapists. Full-time behavioral health awards run up to $50,000 for a two-year commitment at an approved site. The Substance Use Disorder Workforce program pays up to $75,000 for three years, and the Rural Community version pays up to $100,000. The 2026 cycles have closed, but the programs are active — watch for the next application window.
State programs vary widely:
| Program | Award |
|---|---|
| New York Child Welfare Worker Loan Forgiveness | Up to $10,000/yr, $50,000 max over 5 years (currently closed) |
| Maryland Janet L. Hoffman LARP | $1,500–$10,000/yr by debt level (open through March 1, 2027) |
| Texas Mental Health Professionals LRP | Up to $80,000–$100,000 over 3 years for LCSWs, LPCs, LMFTs |
| Illinois Community Behavioral Health Professional LRP | $4,000–$40,000/yr by credential |
Check your own state's programs — most states run something, and many are funded through HRSA's State Loan Repayment Program match.
If you are still in school for social work, roughly 35 states run Title IV-E child welfare education stipend programs that pay tuition up front in exchange for a year of public child welfare employment per year of support. That beats borrowing and forgiving later.
Repayment Programs Based On Your Income
Now let’s take a look at loan repayment programs that work with your income. While these are not forgiveness programs, they can provide you some financial relief.
Two things work in your favor here.
First, foster care maintenance payments are generally excluded from gross income under IRC §131. They do not show up in your AGI, which means they do not raise your income-driven payment. The stipend supports the child without inflating what you owe on your loans.
Second, RAP reduces your payment by $50 per month for each dependent you claim on your federal return. A foster child placed with you by an agency or court order can meet the qualifying child relationship test under IRS Publication 501 if the age, residency, and support tests are also met.
Family size for IBR is messier. The rule counts other individuals living with you who receive more than half their support from you — and because the state stipend is designed to cover that support, whether a foster child clears the threshold depends on your actual numbers. Keep records of what you spend beyond the stipend.
Repayment Assistance Plans
- Payments are 1-10% of your adjusted gross income
- Payments are adjusted based on income changes
- You can receive this benefit for up to 30 years
- Principal reduction subsidy and unpaid interest waiver
Pay As You Earn (PAYE) - Ending 2028
- Payments are 10% of your monthly discretionary income
- Payments are adjusted based on income changes
- You can receive this benefit for up to 20 years
- Applies to Direct loans, Direct PLUS loans made to students and Direct Consolidation loans that do not include Direct or FFEL loans made to parents
Income-based Repayment (IBR)
- Payments are 15% of your monthly discretionary income
- Payments are adjusted based on income changes
- You can receive this benefit for up to 25 years
- Applies to Direct loans, Federal Stafford loans, all PLUS loans made to students and Direct Consolidation loans that do not include Direct or FFEL loans made to parents
Income-contingent Repayment (ICR) - Ending 2028
- Payments are 20% of your monthly discretionary income
- Payments are adjusted based on income changes
- You can receive this benefit for up to 25 years
- Applies to Direct loans, Direct PLUS loans made to students and Direct Consolisation loans (Direct Consolidation loans given to parents may be eligible under this program)
Standard Repayment Plan
- Payments are fixed at $50 per month
- You can receive this benefit for up to 10 years
- The great advantage of this program is that you will pay less interest over time as compared to the other programs described above
- Applies to Direct loans, Federal Stafford loans, all PLUS loans and Consolidated loans (Direct and FFEL)
Two More Places To Find Money
Ask your employer. The $5,250 annual tax-free employer student loan benefit became permanent under OBBBA and starts adjusting for inflation after 2026. Plenty of child welfare agencies, hospitals, and school districts already have a Section 127 plan and never mention it. The loan has to be yours, not a Parent PLUS loan you took for a child.
If you adopt from foster care, the adoption tax credit is worth $17,670 per child in 2026, with up to $5,120 of it refundable — new under OBBBA, so it pays out even if you owe no tax. Most children adopted from U.S. foster care carry a special needs determination, which means you claim the full credit whether or not you had any adoption expenses. Details are on the IRS adoption credit page.
FAQs
Is there student loan forgiveness for foster parents?
No. No federal program forgives student loans based on being a foster parent. You qualify through your employer, your repayment plan, or the tax code.
Do foster care payments count as income for student loan payments?
Generally no. Payments made under a state foster care program are excluded from gross income under IRC §131, so they do not appear in your AGI or raise your income-driven payment.
Can I count a foster child as a dependent for repayment purposes?
Under RAP, dependents claimed on your federal return each reduce your payment by $50 per month. Under IBR, the test is whether the child receives more than half their support from you, which is fact-specific when a state stipend is involved.
What if I work for a foster care agency?
Then you likely qualify for PSLF, and possibly Perkins cancellation if you still hold a Perkins Loan. Submit an employer certification form and confirm your payment count.
What happened to the SAVE plan?
It ended. Borrowers are being moved off in batches with at least 90 days' notice. If you do not choose a plan, you get placed in a Standard plan that may not count toward PSLF.
Bottom Line
There is no shortcut for foster parents, and pretending otherwise wastes your time. The money is in three places: the job you hold, the repayment plan you pick, and the tax return you file. Foster care stipends staying out of your AGI is a real advantage. So is the $50-per-dependent reduction under RAP, and the refundable adoption credit if you adopt.
If you work in child welfare in any capacity, start with PSLF and your state's loan repayment program. That combination is worth more than everything else on this page.
Are you a foster parent ? How have you tackled your student loans? I would love to hear about your experiences in the comments.
Editor: Clint Proctor Reviewed by: Claire Tak
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.