Nearly a million borrowers have received student loan forgiveness under a temporary Biden administration program known as the IDR Account Adjustment. This one-time program was announced by President Joe Biden in 2022 and is aimed at addressing long-standing issues with income-driven repayment plans. These plans allow borrowers to make payments on their student loans based on their income, with the possibility of complete loan forgiveness after 20 or 25 years. By counting past loan periods toward a borrower’s IDR loan forgiveness term, the administration is trying to rectify problems that had delayed or blocked relief in the past.
So far, at least 996,000 borrowers have received more than $49 billion in student loan forgiveness under the initiative. The program has been beneficial for borrowers pursuing Public Service Loan Forgiveness (PSLF) as well. However, as the IDR Account Adjustment comes to a close, borrowers need to be aware of the next steps they need to take in order to qualify for student loan forgiveness. For those with government-held federal student loans, the account adjustment is being applied automatically. But borrowers with commercial FFEL loans, HEAL loans, and Perkins loans need to consolidate those loans through the Direct consolidation program to receive the benefits.
Borrowers who have received enough IDR credit from the account adjustment to reach their 20- or 25-year student loan forgiveness milestone are getting their loans forgiven on a rolling basis. The Education Department is implementing these automatic discharges every two months for borrowers pursuing IDR. For those pursuing PSLF, additional steps need to be taken, including submitting a PSLF Employment Certification form to get credited with qualifying payments. It is important to do this before the upcoming PSLF processing suspension that begins on May 1st to avoid delays.
Even for borrowers who do not qualify for immediate student loan forgiveness, the account adjustment can still be beneficial as it would shorten their remaining time in repayment. The Biden administration expects to complete the account adjustment in July, at which time borrowers should receive information about their IDR credit and remaining time until they qualify for forgiveness. Those who are in default on their federal student loans can also benefit from the program, but they must get out of default by September 30, 2024, in order to receive the full benefit of the payment count adjustment.
After the Fresh Start period ends this fall, defaulted borrowers will have fewer options to benefit from the account adjustment. Only those who rehabilitate to leave default will continue to receive the benefits of the adjustment, but they will not receive credit for periods in default. The Education Department may resume collections efforts against defaulted borrowers, including tax refund seizures and administrative wage garnishment. Overall, the IDR Account Adjustment has been a successful initiative in providing relief to borrowers and addressing issues with income-driven repayment plans.
