IDR and PSLF Program Account Adjustment.

In April of  2022, the U.S. Department of Education (ED) announced several updates that will bring borrowers under income-driven repayment (IDR) plans, closer to forgiveness. These adjustments include conducting a one-time revision of IDR payment counters to address past inaccuracies (including automatically discharging loans for eligible borrowers). Eligible loans will need to apply for consolidation no later than May 1, 2023, to ensure they benefit from the one-time account adjustment.

 

IDR Adjustment 

This one-time revision of IDR payments gives millions of borrowers credit for qualifying payments made towards loan forgiveness through income-driven repayment plans and under the Public Service Loan Forgiveness Program (PSLF). This revision will adjust borrowers’ accounts to give them credit toward forgiveness under the IDR program, no matter how much they paid, the repayment plan, loan type, or if they were behind on payments. The changes will:

  • Give borrowers credit toward the income-driven repayment clock for all monthly payments — even if they weren’t in an IDR plan.
  • Count months spent on deferment (except for in-school deferment) before 2013.
  • Count time spent in forbearances that lasted over 12 consecutive months or 36 or more months cumulatively.
  • Increase the payment count for public servants using the PSLF Waiver to qualify for forgiveness.

Since the one-time account adjustment will be fully implemented in July 2023, a borrower who missed the Limited PSLF Waiver deadline of October 31, 2022, will have one more chance to have their payment count corrected. More than 3.6 million borrowers will receive at least three years of additional credit toward forgiveness under IDR.

 

PSLF Improvements through Regulations

The Department of Education announced on Monday, October 25th, that lasting improvements to the PSLF program will be codified in final regulations. These improvements, which incorporate many elements of the PSLF waiver, include:

  • If you have applied or will apply for PSLF, these changes may have an impact on you by increasing your qualifying payment count.
  • If you have 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance, you will receive PSLF credit for those periods if you certify qualifying employment.
  • Allowing borrowers to obtain credit for late, partial, and lump sum payments if the borrower also certifies qualifying employment.
  • Awarding credit for certain months in deferment or forbearance, such as those tied to military service or deferments for economic hardship or cancer treatment, if the borrower also certifies qualifying employment.

A complete list of the improvements can be found in the fact sheet. The regulations will be published in the coming days and will go into effect on July 1, 2023.

Borrowers could have the option to have other periods of deferment and forbearance potentially counted toward PSLF if they make payments equivalent to what they would have owed at the time. This includes getting credit for periods during which the borrower would have had a $0 payment. The Department of Education has also formalized the reconsideration process for debtors to have their applications reviewed again if there are errors made in the review.