The Biden administration has released several big updates for borrowers pursuing student loan forgiveness under an initiative called the IDR Account Adjustment.
This temporary program can provide borrowers with retroactive credit toward their loan forgiveness milestones under income-driven repayment plans and Public Service Loan Forgiveness. Under IDR plans, borrowers can become eligible for student loan forgiveness after 20 or 25 years of payments, depending on their loans and the specific IDR plan, while borrowers on track for PSLF can receive a discharge in as little as 10 years. But due to longstanding mismanagement, few borrowers had received any relief under these programs.
The account adjustment, first announced by President Biden over a year and a half ago, can provide borrowers with credit toward their student loan forgiveness terms under IDR and PSLF for many past periods of repayment, deferment, and forbearance that previously would not have counted. Those who reach the threshold for discharge would see their balances wiped out, while other borrowers will get a boost in progress toward their loan forgiveness term, shortening their remaining time in repayment.
“Since this summer, the U.S. Department of Education (Department) has approved almost $44 billion in debt relief for more than 900,000 borrowers as part of the payment count adjustment,” said the department in a new blog post this week. “This is a one-time initiative to address historical failures in administering student loans. It provides much-needed relief to borrowers who have been in repayment for 20 years or more and gives all other borrowers an accurate picture of their progress toward forgiveness going forward… And we’re not done. We will continue identifying borrowers eligible for forgiveness regularly so they don’t have to wait to get relief.”
Here’s what borrowers need to know.
Consolidation Deadline Extended For Student Loan Forgiveness Adjustment
One of the biggest updates to the IDR Account Adjustment is a last-minute extension of a critical consolidation deadline.
Many borrowers who have government-held student loans, including Direct loans and a subset of Education Department-owned FFEL loans, will receive the IDR student loan forgiveness credit associated with the account adjustment automatically. “The payment count adjustment is automatic for Direct or federally managed FFEL loans—no application required,” reiterated the department in the new guidance.
But other borrowers may need to consolidate their loans via the federal Direct loan program to qualify or maximize the benefits. This includes those who have commercial FFEL loans and other non-Direct federal student loans, as well as borrowers who have multiple federal loans with different repayment histories; under the adjustment, borrowers who consolidate loans with different IDR and PSLF payment counts will receive the highest amount of loan forgiveness credit on the new Direct consolidation loan based on the underlying loan with the longest history, according to the department.
The deadline to apply for a Direct consolidation loan to benefit from the account adjustment had been December 31. However, the department has now extended the deadline to April 30, 2024, giving borrowers an additional four months.
“Borrowers with commercially managed FFEL or Perkins loans should apply to consolidate as soon as possible—but no later than April 30, 2024—to get the full benefits of the adjustment,” says the department.
Adjustment Will Be Run Monthly Or Semi-Monthly As Student Loan Forgiveness Is Processed
While officials have billed the IDR Account Adjustment as a “one-time” program, technically it’s…
This article was originally published by a www.forbes.com . Read the Original article here. .