The Education Department recently announced an extension to the deadline for borrowers to take advantage of the IDR Account Adjustment program, allowing them more time to benefit from student loan forgiveness initiatives. This program can accelerate progress towards loan forgiveness under income-driven repayment plans by counting previously ineligible past loan periods. The program has already resulted in nearly a million borrowers having their loans discharged, with some borrowers receiving immediate forgiveness and others seeing a reduction in the time remaining on their forgiveness term.
The adjustment can also benefit borrowers pursuing Public Service Loan Forgiveness, allowing for a discharge in as little as 10 years for those in nonprofit or public sector careers. More than 800,000 borrowers have already received forgiveness through PSLF, partially due to the account adjustment benefits. Parent PLUS borrowers can also receive benefits under this program, but some borrowers may need to take specific action to benefit from the program. The recent deadline extension provides borrowers with additional time to apply for the program and potentially qualify for loan forgiveness.
The IDR Account Adjustment benefits only apply to federal student loans held or administered by the government. While Direct federal student loans are eligible, some FFEL-program loans may also qualify if they have been transferred to the Education Department. For borrowers with commercially-held FFEL loans or Perkins loans, consolidation into a Direct loan is required to qualify for the account adjustment. The latest extension gives borrowers until June 30th to consolidate their loans and potentially benefit from the program.
The extension also allows borrowers to maximize student loan forgiveness credit for IDR plans. Borrowers who consolidate their loans through the Direct loan program can receive credit for nearly any past repayment period, deferment, or forbearance under the IDR Account Adjustment. This consolidation deadline gives borrowers the opportunity to consolidate loans with existing IDR credit and enroll in the new SAVE plan, benefiting from the weighted average of IDR credit on the underlying loans.
Similarly, borrowers pursuing PSLF can maximize their benefits under the account adjustment by consolidating their loans and receiving the highest amount of PSLF credit. The revised rules allow for periods of repayment on loans prior to consolidation to count towards IDR forgiveness and PSLF, enhancing the benefits for eligible borrowers. The extension provides borrowers with more time to consolidate loans and apply for the program before the new rules take effect in July.
Parent PLUS borrowers can also benefit from the IDR Account Adjustment by consolidating their loans into a Direct loan, allowing for eligibility under Income Contingent Repayment plans. Time spent in repayment on Parent PLUS loans can count towards the 25-year IDR loan forgiveness term and PSLF for qualifying borrowers. The deadline extension gives parent borrowers more time to take action and consider their options for potentially reducing their repayment burden. The implementation of the program has also been pushed to September, giving borrowers more time to plan and utilize the benefits of the IDR Account Adjustment.
