President Biden’s administration announced that income-based repayment programs, like IDR (income-driven repayment) will be expanded and will allow for more borrowers to qualify for forgiveness. According to the Education Department, “at least 3.6 million borrowers will be provided with options to move closer to debt forgiveness. Also, “40,000 borrowers to receive immediate forgiveness.”

As with many federal student loan relief programs, the new initiative is somewhat complicated. Here’s who qualifies, and what borrowers need to do.

How Does This Work?

The Education Department will conduct a one-time adjustment to borrower accounts to allow past periods of repayment to count towards the borrowers forgiveness terms in the following situations:

  • Past repayments will count towards the 20 or 25-year IDR loan forgiveness term, even including repayments under non-IDR plans
  • For past periods of forbearance for 12 consecutive months or more will count towards your 20 or 25-IDR loan forgiveness. This is also applicable to borrowers who had 36 months of cumulative forbearance. If you are part of PSLF, and have not certified your employment for those periods, you need to do so. Visit the Department of Education’s online PSLF Help Tool.
  • If you had past periods of deferment that occurred before 2013, this will also count towards your 20 or 25-year IDR loan forgiveness. However, this will not be applicable to in-school deferments.

The Education Department will also count payments made under loan consolidation towards your loan forgiveness. “For example, a borrower who spent 16 consecutive months in forbearance would be given credit for 16 qualifying payments toward cancellation.”

The changes will be automatically applied to your loan(s). However, in some cases you may need to take additional steps to qualify for relief.

Who Qualifies?

You must have loans that have accumulated repayment time of at least 20-25 years. This will apply even if you are not on an IDR plan. Meaning, you can also qualify if you are involved in the Public Service Loan Forgiveness (PSLF) program.

If you are part of PSLF, and want more information, click here: Limited PSLF Waiver for more details. Keep in mind that the Limited PSLF Waiver did not include forbearance relief, but the new IDR changes do.

What If I Don’t Qualify?

If you find that you do not immediately qualify for the automatic student loan forgiveness with the IDR changes, you may still see that the changes still bring you closer to wiping out your student loans. According to the Education Department, IDR progress reports for borrowers and payment counts will begin to be published sometime next year.

What if My Forbearance Period is Shorter Than 12 Months?

You may need to submit a dispute. The FSA will make the determination after you submit a dispute claim to the Feedback Center. You will need to explain that you were steered into a forbearance during that period, instead of an IDR plan, which would have been more appropriate for your situation.

I have an FFEL, What Do I Do?

For borrowers with FFELs, you may need to consolidate your loans. FFEL-program loans are commercially-issued federal student loans. These loans are backed by the government. 

According to the Education Department, you will need to consolidate your loan first. This can be done through a Federal Direct Consolidation Loan Program. Do you have a commercially held FFEL loan? If so, you can only benefit from the IDR adjustment if you consolidate before the changes are implemented. The estimated date of completion is January 1, 2023.

Please keep in mind that consolidation typically erases any progress towards your repayment term and will restart the clock on any payments qualifying towards loan forgiveness. However, under the IDR changes, “any time in repayment prior to consolidation on consolidated loans” will count, says the Department.”

Need More Information?

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