US President Joe Biden looks on during a meeting in the Oval Office of the White House in … [+]
A temporary federal student loan forgiveness program enacted by President Biden is about to hit a key cutoff date at the end of the month. Borrowers who need to take action in order to qualify for relief now only have a few weeks remaining before this key opportunity is set to end. And while advocates are hoping for an extension, so far there are no indications that one is coming.
Here are the details.
Student Loan Forgiveness Under Temporary Adjustment
The student loan forgiveness opportunity that is set to expire at the end of December is the IDR Account Adjustment. The adjustment is a temporary program designed to rectify historic problems associated with income-driven repayment plans. IDR plans can provide borrowers with affordable monthly payments tied to their income, along with student loan forgiveness after 2o 0r 25 years in the program. But IDR plans were beset by record-keeping mistakes, poor communication, and inadequate oversight for years, resulting in very few borrowers receiving the relief they were entitled to under federal law.
Under the IDR Account Adjustment, first announced by President Biden last spring, borrowers will be able to receive “credit” toward their IDR student loan forgiveness term, even if they have’t been repaying their loans under an IDR plan. Many past periods of repayment, as well as certain periods of deferment, forbearance, and (in some limited cases) default can count. Borrowers who receive enough IDR credit to reach the 20- or 25-year milestone for student loan forgiveness would receive a discharge. Other borrowers can effectively jumpstart their progress.
The periods can also potentially count toward Public Service Loan Forgiveness, a federal student loan forgiveness program for people working in nonprofit and public occupations.
Many borrowers with government-held federal student loans will receive this retroactive loan forgiveness credit automatically under the adjustment. But those who have commercial FFEL loans, Perkins loans, or HEAL loans must apply to consolidate those loans via the federal Direct consolidation program before the end of 2023 in order to be eligible. And borrowers who have multiple loans with significantly different repayment histories may also benefit by applying to consolidate before December 31, as their new Direct consolidation loan would be credited with the highest amount of IDR and PSLF credit based on the underlying loan that has the longest amount of time spent in repayment, according to the Education Department.
Hundreds Of Thousands Already Approved For Student Loan Forgiveness
Already, more than 800,000 borrowers have received student loan forgiveness under the IDR Account Adjustment. The Education Department began discharging loans in July for those who reached the 20- or 25-year milestone. Last week, President Biden sent emails to many of these borrowers, congratulating them on receiving student loan forgiveness under the initiative. “I’m proud that my Administration has delivered on that promise” of student loan forgiveness, said Biden in the email.
Biden had previously announced a much broader student debt relief initiative that could have wiped out $10,000 or more in federal student loan debt for 30 million borrowers. But the Supreme Court struck down that plan in June. The Biden administration is instead implementing more narrowly tailored programs like the IDR Account Adjustment, while working on developing a replacement loan forgiveness plan.
What Borrowers Seeking Student Loan Forgiveness Under The Adjustment Should Expect
The Biden administration is actively implementing the IDR Account Adjustment, although relief is happening in phases. The borrowers who have already been approved for student loan forgiveness had Direct loans (or consolidated their loans via the Direct loan program) in time for the Education Department to implement relief during the last five months. More than half a million additional borrowers have separately benefited from the adjustment via the PSLF program if they had properly certified their public service employment. PSLF borrowers must certify their employment in order to receive PSLF credit, even under the account adjustment.
The Education Department will continue running the account adjustment for IDR and PSLF into 2024. Then, later in 2024, the department will run the adjustment a final time. For borrowers who receive IDR credit but have not yet reached the 20- or 25-year threshold for student loan forgiveness, the department will publish IDR payment counts showing how far along they are on their repayment term. These borrowers will then need to continue repaying their loans under an IDR plan in order to continue progressing toward eventual student loan forgiveness.
The department has not yet indicated how borrowers will be notified of their IDR payment counts if they don’t yet qualify for loan forgiveness.
Further Student Loan Forgiveness Reading
Didn’t Get A Student Loan Forgiveness Email? 7 Possible Reasons Why
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5 Student Loan Forgiveness Mistakes To Avoid, According To An Attorney
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