The recent income-driven repayment (IDR) account adjustment resulting in over 800,000 long-term federal student loan borrowers having their loans forgiven has significant implications for borrowers, particularly those enrolled in IDR plans.
While automatic forgiveness applies primarily to those in repayment for 20 or 25 years, newer borrowers can still benefit from the program, even if they don’t receive forgiveness immediately.
Understanding the IDR adjustment process is crucial. For borrowers not qualifying for automatic forgiveness, the account adjustment moves them closer to the end of their repayment period and potential forgiveness, especially if they enroll in an IDR plan.
Can you still apply for student loan forgiveness this year?
Borrowers receiving IDR credit under the adjustment will see their payment count updated in 2024.
“The U.S. Department of Education (ED) currently expects that the payment count adjustment will be completed by July 1, 2024,” the official Federal Student Aid website reads.
“When we implement the adjustment, it will automatically be applied to all Direct Loans and FFEL Program loans that are 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.”
To determine how much IDR credit you’ll receive, tallying past payments is necessary. Generally, borrowers qualify for IDR forgiveness after 20 or 25 years on a plan, equating to 240 or 300 monthly payments capped at a percentage of their income.
For those needing to consolidate loans, especially certain types like FFEL Program loans or Perkins loans, completing the consolidation process by April 2024 is crucial to receive the account adjustment.
Enrolling in an IDR plan is essential for borrowers to continue making progress toward loan forgiveness. The Federal Student Aid office offers various plans, including the newest IDR plan, Saving on a Valuable Education (SAVE), which provides benefits like reduced monthly payments and faster forgiveness for borrowers with smaller balances.