As I see it, that IRS issued memorandum is dated 2011 - 8 years ago. Basically, you can completely disregard it now. For example, take a look at the referenced Internal Revenue Code section 108 at https://www.law.cornell.edu/uscode/text/26/108. It deals with "discharged debt". That basically means it applies to someone who has filed for bankruptcy or some other form of debt reduction because of financial hardship. It also addresses loan forgiveness if certain conditions are met such as doing volunteer work for a defined period of time with your skills for the Peace Corps. Now that's just one example here. I haven't bothered to look for other examples, as that was the first one to "jump out at me" and from my perspective I see no need to go any further.
Now when I look at 108(f) as a whole, the 108(f) (1) is referencing student loans which I would assume are qualified student loans. It basically talks about loan forgiveness referred to as "discharge of debt" if the borrower meets certain criteria. Now it looks like your "lender" qualifies your loan as a "qualified" student loan under section 108(f)(2)(C) or 108(f)(2)(D)
Now in most cases when a loan is forgiven and the borrower is not required to pay it back, it's common for that borrowed amount to no longer be considered borrowed. Instead, it's considered as "given" to the borrower. That means the lender to deduct that given amount from their taxable income, and the borrower has to include it in their own taxable income and pay taxes on it.
But sometimes for students there are programs where if the student meets certain per-defined conditions, not only does the student not have to repay the loan, the student also does not have to include the borrowed money as taxable income. Instead, the money is "treated like" a grant.
So at this point based on the limited "finder details" of information you've provided, and the vast amount of assumptions based on no "real" facts, it's a toss-up as to how you will be able to treat this at tax filing time. I would highly suggest you take all the documentation you have on your particular situation and visit a tax professional.
Now understand I"m not recommending a CPA here. While you may find a CPA that is knowledgeable in the "finer details" of your specific situation, I myself would feel more comfortable with a tax professional. While a tax attorney would be best, I think that would be a bit of overkill for what an attorney would charge, as opposed to a tax professional.
Now if you're in a college town I would expect at least a few CPAs to be knowledgeable enough in this area to keep you out of potential trouble with the IRS in the future on this specific matter.
