The Income-Driven Repayment (IDR) Waiver, or one-time Account Adjustment program that was introduced last year by the Department of Education as a remedy for historic problems including ballooning balances due to capitalizing interest, is ending on December 31, 2023.
The program expands qualifying payments for the 10-year Public Service Loan Forgiveness and the 20 or 25-year Income-Driven Repayment (IDR) forgiveness programs. It now includes additional repayment periods and numerous instances of forbearance or deferment.
All borrowers of the Direct loan program, including graduate and Parent PLUS Loan holders, will get at least three years of credit towards forgiveness. However, some borrowers are required to consolidate to be eligible.
We're only weeks away from the deadline for this student loan forgiveness. This means that some borrowers will need to act quickly to secure the student loan forgiveness they are eligible for.
Some Must Consolidate Immediately to Qualify
4 million or more borrowers could receive total forgiveness if they consolidate before the deadline. Borrowers with FFEL Loans not held by the ED can consolidate by combining one or more federal education loans into a new Direct Consolidation Loan. Doing this will make that loan eligible for the IDR and PSLF programs.
The deadline for consolidation is December 31, 2023.
Borrowers can start the consolidation process now to lock in their payment credits with the Chipper app. Chipper's intelligent loan technology determines which loans are eligible for consolidation. It then guides borrowers through an easy application process, enabling them to secure their lowest possible monthly payment and achieve loan forgiveness sooner.
Who Will Benefit from the Waiver
This could result in millions of borrowers having their entire balances entirely eliminated. However, many borrowers must act before the Administration's December 31, 2023, deadline.
- Borrowers who have been or are currently on an IDR Plan
- Borrowers in the Public Service Loan Forgiveness (PSLF) program
- Borrowers who have a Direct or Federal Family Education Loan (FFEL) Program loans held by the U.S. Department of Education (ED).
Additional Eligible Payments Under the One-Time Adjustment Include
- 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.
Payment Counts for Borrowers Going After Public Service Loan Forgiveness (PSLF)
- Borrowers who consolidate their FFEL loans before December 31, 2023, will have their payments count towards PSLF.
- PSLF counts show zero in Fall 2023 will 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.
- Changes will be automatically applied to all PSLF-eligible Direct Loans, including both consolidated and unconsolidated parent PLUS loans.
The Deadline Looms Despite Recent Servicer Mishaps
Some reports suggest that the Biden administration might extend the consolidation deadline for the IDR Account Adjustment to July 1, 2024 to prevent issues related to Direct loan consolidation during the interim period.
The Education Department has acknowledged the billing errors made by servicers and the delays in implementing student loan initiatives, including miscalculations of payments under the Saving on a Valuable Education (SAVE) plan. Officials have stated that they will address these issues by waiving interest, offering reimbursements, and providing credits towards student loan forgiveness under Automatic Forbearance.
Given the widespread issues that borrowers are encountering, the Education Department may extend the benefits of the IDR Account Adjustment, including the consolidation deadline. However, they have not yet formally indicated that they will do so.
Make sure you're enrolled in an Income-Driven Repayment (IDR) plan today to ensure that you receive forgiveness as soon as possible.
