Student Loan Repayment Program Consultants
Back in April 2022, the U.S. Department of Education (ED) announced several changes and updates that will bring borrowers closer to forgiveness under income-driven repayment (IDR) plans. These adjustments to borrower accounts include conducting a one-time adjustment of IDR payment counts to address past inaccuracies and permanently fixing IDR payment counting by reforming ED’s IDR tracking procedures going forward.
Based on the newly eligible months from the one-time account adjustment, borrowers who have reached 240 or 300 months’ (as applicable) worth of payments for IDR forgiveness or 120 months of PSLF began to see their loans forgiven in spring 2023. As of December 2023, the Department has approved almost $44 billion in debt relief for more than 900,000 borrowers as part of the payment count adjustment. The Department will continue to discharge loans as borrowers reach the months needed for forgiveness, and is expected to complete the full adjustment by July 1, 2024. That means all borrowers with Direct or Federal Family Education Loan (FFEL) Program loans held by the Department will see their progress toward forgiveness update automatically after that point. Borrowers with loans not currently held by the Department, however, such as those with commercially-held FFEL or Perkins loans, can get the benefit of the adjustment by applying to consolidate by April 30, 2024.
This information applies to you if you are
If you aren’t on an IDR plan but want to reduce your monthly payment, learn more about IDR plans here.
If you’re on an IDR plan or working toward PSLF, your remaining loan balance gets forgiven after you make the required number of payments. (The amount of time depends on your plan.)
In the past, there were a variety of reasons why some months may not have been credited toward loan forgiveness—for example, months when you were in a payment plan that wasn’t eligible.
With this payment count adjustment, ED will change whether certain payments or months are credited toward your loan forgiveness. Depending on the status of your loan repayment, this change will result in one of the following for eligible borrowers:
ED will review every borrower account that has at least one Direct Loan or one FFEL Program loan held by ED. We will identify all payments to be counted and instruct your servicer to make the update to your account.
If this review results in you being eligible for IDR forgiveness, ED will contact you and give you the chance to opt out of receiving the forgiveness.
Borrowers leaving default through Fresh Start, assignment from a guaranty agency, or loan rehabilitation will receive the payment count adjustment treatment at that point even if that occurs after the adjustment is applied to other borrowers.
As part of this initiative, ED will conduct a one-time adjustment of IDR-qualifying payments for all William D. Ford Federal Direct Loan (Direct Loan) Program and federally owned Federal Family Education Loan (FFEL) Program loans. ED will adjustment to borrower accounts and count time toward IDR forgiveness, including:
Generally, repayment status includes any periods where the borrower was enrolled in a repayment plan. Repayment status does not include periods in forbearance, deferment, bankruptcy, or default; however, certain periods of forbearance, deferment, or default will count toward forgiveness in the circumstances described above.
Any borrowers with loans that have accumulated eligible time in repayment of at least 20 or 25 years will see automatic forgiveness, even if they are not currently on an IDR plan.
Borrowers will continue to see the COVID-19 related forbearances counted toward IDR and PSLF forgiveness.
ED encourages borrowers who have commercially managed FFEL, Perkins, or Health Education Assistance Loan (HEAL) Program loans to apply for a Direct Consolidation Loan by April 30, 2024, to get the full benefits of the payment count adjustment.
In most cases, if borrowers made qualifying payments that exceed the applicable forgiveness period (20 or 25 years), they will receive a refund for their overpayment.
Borrowers with loans in default can benefit by getting out of default—including through the Fresh Start initiative. Borrowers who exit default prior to the end of the Fresh Start period will receive the full benefit of the payment count adjustment and receive credit for periods in default from March 2020 through the month they exit default. After the Fresh Start period, only borrowers who rehab to leave default will benefit from the adjustment, but they will not receive credit for periods in default during the payment pause.
The U.S. Department of Education (ED) currently expects that the payment count adjustment will be completed by July 1, 2024. When ED implements the adjustment, it will automatically be applied to all Direct Loans and FFEL Program loans managed by ED at that time. This includes Direct Consolidation Loans that repaid a privately held Perkins or FFEL Program loan and that are disbursed before the adjustment occurs.
Please note that submitting a consolidation application alone does not guarantee any benefits under the payment count adjustment. In general, it takes at least 60 days to process a Direct Consolidation Loan application and to disburse the new loan. This means that if you want to consolidate your loan(s) in order to benefit from the adjustment, you should submit a loan consolidation application by April 30, 2024.
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