The Biden administration has announced an extension of the deadline for borrowers seeking student loan forgiveness through a one-time adjustment initiative. Originally set for April 30, the deadline for loan consolidation has been extended to June 30. The purpose of this extension is to ensure that borrowers receive credit for every month they have rightfully earned towards forgiveness. The initiative has already provided forgiveness to nearly 1 million borrowers, and the administration is working swiftly to help more borrowers benefit from this program.
The IDR Account Adjustment is designed to correct historic issues with income-driven repayment plans and the Public Service Loan Forgiveness program, both of which can result in student loan forgiveness after a certain number of years in repayment. Due to unclear rules and poor oversight by the government, many borrowers have lost progress towards loan forgiveness that they were entitled to. The one-time account adjustment is a temporary waiver that allows borrowers to receive retroactive credit for past periods of repayment that previously would not have counted towards forgiveness. Borrowers with federal student loans other than Direct loans must consolidate into the Direct loan program to qualify for this relief.
The initial consolidation deadline of April 30 could have been problematic for borrowers who already had IDR or PSLF credit, as consolidating would have resulted in the loss of that credit prior to the IDR Account Adjustment. However, new PSLF regulations allow borrowers to retain the weighted average of existing PSLF credit if they consolidate after the account adjustment period. But the weighted-average treatment for IDR is set to go into effect under Biden’s new SAVE plan on July 1. With the deadline extension to June 30, borrowers have more time to consolidate their loans and ensure they benefit from the IDR Account Adjustment.
The Education Department has already approved over $49 billion in student loan forgiveness for nearly 1 million borrowers under the IDR Account Adjustment initiative. Hundreds of thousands of additional borrowers have received discharges through the PSLF program as a result of the same initiative. The department expects to complete implementation of the account adjustment by September, rather than the previously anticipated July. Borrowers will be able to view their IDR payment counts on their StudentAid.gov account, and those who are not enrolled in an IDR plan may need to switch to a plan like SAVE to continue making progress towards loan forgiveness.
Overall, the extension of the consolidation deadline for student loan forgiveness under the IDR Account Adjustment initiative provides relief for borrowers who need to consolidate their loans to qualify for forgiveness. The program aims to correct past issues with income-driven repayment plans and the PSLF program and help borrowers receive the forgiveness they are entitled to under federal law. The administration’s efforts to streamline the forgiveness process and ensure borrowers receive proper credit for their payments are an important step towards easing the burden of student loan debt for millions of Americans.
