There have been plenty of important dates to keep track of when it comes to federal student loans this year, mostly because of the various rules and waivers the Biden Administration has pushed forward to help student loan borrowers.
One of the biggest programs that hasn’t received a lot of attention is the IDR Waiver or IDR Count Adjustment. This plan is specific to borrowers with older Federal Family Education Loan (FFEL) Program loans who may have been paying their loans for years longer than necessary. Believe it or not, the Department of Education wasn’t keeping track of past payments, and this program is designed to fix that.
If you are hoping to have payments counted in the IDR waiver this year because you’re repaying student loans on an income-driven repayment plan and you have commercially-held Federal Family Education Loan (FFEL) Program loans, there’s yet another date to keep track of.
Essentially, you’ll need to consolidate your FFEL loans by December 31, 2023 for eligible payments to qualify, which means you will probably want to begin the process as quickly as you can.
What Is The IDR Waiver?
The Biden Administration’s IDR waiver, also known as the IDR Account Adjustment, is a program that intends to help borrowers repaying federal student loans get credit for payments toward forgiveness, even during periods when they weren’t making payments. The underlying goal here is getting borrowers closer to the date when loan forgiveness will apply, or even pushing them past the threshold where they can have remaining loan balances forgiven altogether.
Generally speaking, this program is for:
- Borrowers repaying loans on an income-driven repayment (IDR) plan, and those repaying on an income-driven plan in the past
- Borrowers who are not on an IDR plan but are interested and have Direct loans or Federal Family Education Loan (FFEL) Program loans
Those who qualify for the account adjustment can see a number of changes happen depending on whether they are repaying loans on an income-driven plan or Public Service Loan Forgiveness.
For income-driven plans, for example, borrowers can get credit for months in repayment regardless of the payments made or the repayment plan. IDR borrowers can also get credit for 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance, any months spent in economic hardship or military deferment after 2013, most months spent in deferment prior to 2013, and months in repayment before consolidation with a Direct Consolidation Loan.
According to the U.S. Department of Education, borrowers with loans that have accumulated eligible time in repayment of at least 20 or 25 years will also see automatic forgiveness even if they weren’t on an income-driven repayment plan at all. And if borrowers have made any payments that exceed the normal forgiveness period of 20 to 25 years, they could even receive a refund.
For borrowers on PSLF who would normally have their remaining student loan balances forgiven after 10 years of eligible employment in a public service position, payment counts will reset in fall of 2023. The following will also apply:
- PSLF counts will be adjusted each month until the IDR counts for all federally held FFELP and Direct Loans are adjusted again in 2024.
- At that point in 2024, all periods credited toward IDR will also be credited toward PSLF for eligible loans.
- Those who have applied or plan to apply for PSLF and certify their employment can see these adjustments made to their payment count.
- These changes can be applied to all PSLF-eligible Direct Loans, including parent PLUS loans that have and have not been consolidated.
Borrowers With FFEL Loans Must Consolidate by December 31, 2023
Essentially, these changes mean that eligible borrowers will get credit for more payments overall — perhaps even enough payments to push them towards the threshold of total forgiveness. Millions of borrowers could see all their student loan debt wiped away in the process, and the U.S. Department of Education says more than 3.6 million borrowers with federal student loans will get at least three years of credit toward forgiveness right off the bat.
That said, it’s crucial to understand that the type of federal student loans you have matters if you want to qualify for the IDR waiver. In fact, you have to consolidate your commercially-held FFEL loans by the end of this year if you want to qualify for this program on an income-driven repayment plan. If you want to pursue PSLF, you must consolidate both federally-held and commercially-held FFEL loans..
Here’s what the U.S. Department of Education says on its website:
“Do you want to pursue PSLF but have FFEL Program loans held by ED? Only Direct Loans are eligible for PSLF, so you must consolidate your FFEL Program loans into the Direct Loan program before the adjustment to get PSLF credit.”
How To Consolidate FFEL Loans
Direct Consolidation Loans come with a range of important benefits, including the ability to move several loan payments into a new loan with a single monthly payment and access to income-driven repayment plans and forgiveness programs. Consolidating FFEL loans is also the path to qualifying for the IDR waiver as we already mentioned, and you only have until December 31, 2023 to get to the finish line if you want to qualify.
Fortunately, the U.S. Department of Education offers a ton of information on Direct Consolidation Loans and how to apply on its website. You can also apply for a Direct Consolidation Loan online using a process that typically takes 30 minutes or less.
To apply for a Direct Consolidation Loan, you’ll need the following:
- FSA ID
- Full name, address, date of birth, phone number
- Financial information, including your income
- Loan information like your loan type, loan amount, and servicer
Don’t forget that you have to have FFEL loans consolidated with a Direct Consolidation Loan by December 31, 2023 if you want to qualify for the IDR waiver. Doing so can help you get at least three years of payments counted toward progress toward forgiveness, and you don’t want to miss out on this benefit.
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