Nearly a million borrowers have received student loan forgiveness under a temporary Biden administration program, with more possible relief on the way. The IDR Account Adjustment program aims to address issues with income-driven repayment plans, allowing borrowers to make payments based on their income and potentially have loans forgiven after 20 or 25 years. By adjusting payment counts, the program is rectifying problems that had delayed or blocked relief for many borrowers. So far, over 996,000 borrowers have received upwards of $49 billion in forgiveness, with more approvals expected for the Public Service Loan Forgiveness component.
Under the IDR Account Adjustment, borrowers with government-held federal loans are automatically receiving the benefits, while those with commercial FFEL, HEAL, and Perkins loans must consolidate through the Direct program to qualify. The deadline for Direct consolidation for the account adjustment is April 30th. Automatic forgiveness will continue for borrowers who reach their forgiveness milestones. Borrowers pursuing PSLF must certify employment by April 30th to benefit from the account adjustment, with anticipated delays due to a processing suspension beginning on May 1st.
The program also benefits borrowers with Direct Loan Program loans, with those who receive at least three years of credit being closer to forgiveness. The Education Department plans to provide IDR credit information to borrowers in July, although delays may occur. For borrowers not meeting the threshold for immediate cancellation, continuing repayment under an IDR plan is necessary to progress toward student loan forgiveness. Those in default may also qualify for forgiveness by exiting default before the Fresh Start period ends in September 2024.
Borrowers who are in default can benefit from the account adjustment by getting out of default through consolidation, rehabilitation, or Fresh Start before the program ends. Defaulted borrowers who exit default before the Fresh Start period ends will receive credit for periods in default from March 2020 until they exit. After Fresh Start ends, only those who rehabilitate to leave default will benefit, but they will not receive credit for periods in default after March 2020. Collections efforts can resume after Fresh Start ends, including tax refund seizures and wage garnishment.
In summary, nearly a million borrowers have received student loan forgiveness under the Biden administration’s IDR Account Adjustment program, with more approvals expected for Public Service Loan Forgiveness recipients. Borrowers with government-held federal loans are automatically receiving benefits, while those with other types of loans must consolidate to qualify. The Education Department plans to provide IDR credit information in July, although delays may occur. Defaulted borrowers can benefit from the program if they exit default before the Fresh Start period ends in September 2024. After this date, only those who rehabilitate to exit default will benefit, but collections efforts can resume against defaulted borrowers.
