Income-Driven Repayment (IDR) Account Adjustment

One-time Payment Count Adjustment Towards Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF)

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.

One-Time Payment Count Adjustment for Eligible IDR Borrowers

Permanent Fixes to IDR Payment Counting

Positive Effects on Public Service Loan Forgiveness (PSLF) & Other Borrowers

Who is affected by this?

This information applies to you if you are

  • on an IDR plan or were on one in the past;
  • in the Public Service Loan Forgiveness (PSLF) program; or
  • not on an IDR plan but are interested and have Direct or Federal Family Education Loan (FFEL) Program loans held by the U.S. Department of Education (ED).

If you aren’t on an IDR plan but want to reduce your monthly payment, learn more about IDR plans here.

About the Improvements

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:

  • You still have more time left until the end of your repayment period. You will be closer to the end of your repayment period and closer to forgiveness.
  • You reach the end of your repayment period. You will automatically receive loan forgiveness.
  • You have more than the number of months required in your repayment period. In most cases, you’ll receive a refund for any overpayment.

How It Works

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.

  • ED has begun to review loans that have been in repayment long enough to qualify for IDR forgiveness (borrowers who have been in repayment for 20 or 25 years). ED will then reevaluate your account every other month to determine if additional borrowers will qualify for forgiveness.
  • Next, ED will review borrowers with at least one approved PSLF form to update the months that could qualify for PSLF only. These borrowers will see their PSLF payment counts update each month until we make the final adjustment to their IDR counts in 2024.
  • Finally, ED will review all eligible loans to update the months that qualify for IDR forgiveness.

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.

Payment Count Adjustment for Eligible 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:

  • any months in a repayment status, regardless of the payments made, loan type, or repayment plan;
  • 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance;
  • any months spent in economic hardship or military deferments in 2013 or later;
  • any months spent in any deferment (with the exception of in-school deferment) prior to 2013; and
  • any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a consolidation loan.

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.

Effects on Public Service Loan Forgiveness (PSLF) Applicants & Estimate of Overall Impact

  • Borrowers with at least one approved PSLF form began to see PSLF counts adjusted in Fall 2023.
  • Borrowers who consolidate will have their PSLF counts temporarily reset to zero, and these counts began adjusting in Fall 2023.
  • PSLF counts will continue to be adjusted each month until the IDR counts for all federally held FFELP and Direct Loans are adjusted in 2024.
  • After the adjustment in 2024, all periods credited toward IDR will also be credited toward PSLF for eligible loans and periods where the borrower certifies public service employment.
  • If you’ve applied or will apply for PSLF and certify your employment, you may see the benefits of this adjustment to your qualifying payment count.
  • These changes will be applied automatically, to all PSLF-eligible Direct Loans, including consolidated and unconsolidated parent PLUS loans.
  • If you believe you might benefit, use the PSLF Help Tool to certify periods of employment and track your progress toward forgiveness.
  • Borrowers who have commercially or federally held FFEL loans and who apply to consolidate those loans into Direct Consolidation Loans by April 30, 2024, will also get PSLF credit under the payment count adjustment.

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.

Want to learn more? Get in contact with us by calling us or filling out the form below and one of our professionals will reach out to you. We look forward to hearing from you!

Fill out my online form.