Biden’s Student Loan Forgiveness Plan: Just Three Opportunities Remain


The Biden administration is still granting student loan forgiveness through a temporary program that eases important regulations surrounding income-driven repayment plans. Up until now, close to a million borrowers have been granted debt relief through this initiative.

However, the program is set to conclude in a few months, following the administration’s last-minute extension last fall. And borrowers are running out of opportunities for loan forgiveness before stricter rules are reinstated.

Here’s some important information for borrowers.

3 More Student Loan Forgiveness Cycles Under Account Adjustment

The IDR Account Adjustment was implemented by the Biden administration as a solution to address long-standing issues with income-driven repayment plans. These plans offer borrowers the option to make payments on their federal student loans according to their income and family size. After 20 or 25 years of repayment, any remaining balance may be eligible for loan forgiveness. However, in previous instances, numerous borrowers were unfortunately guided towards expensive forbearances that do not contribute towards loan forgiveness. Additionally, inadequate record-keeping hindered others from receiving recognition for the time they dedicated to repayment.

As part of the account adjustment, previous repayment periods under any plan, along with certain deferment and forbearance periods, can be considered for loan forgiveness under IDR plans. This can help speed up progress towards IDR forgiveness. Individuals who have accumulated sufficient credit to reach either the 20-year or 25-year milestone will be granted a discharge of their outstanding balance.

The Education Department has been implementing the adjustment every two months since last July. In the latest batch announced last month, loan forgiveness approvals reached a staggering $5 billion, benefiting over 900,000 borrowers.

However, the temporary program will be coming to an end in a few more months. According to recently released guidance, the U.S. Department of Education (ED) anticipates that the payment count adjustment will be finalized by July 1, 2024. The department plans to run the adjustment once more in March and then again in May, before the final implementation in July.

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Deadline Looms for Student Loan Forgiveness Consolidation

Although the July deadline holds significant importance for the account adjustment, borrowers should take note of an earlier deadline in April.

Individuals with government-owned loans, such as Direct federal student loans, will automatically qualify for the benefits of the IDR Account Adjustment. However, individuals who have federal student loans that are not held by the Education Department, such as commercial FFEL loans, Perkins loans, and HEAL loans, will need to consolidate those loans through the federal Direct consolidation program by the end of April. This is necessary in order to take advantage of the final implementation of the IDR Account Adjustment, which is scheduled for this July.

Typically, it requires a minimum of 60 days to complete the processing and disbursement of a Direct Consolidation Loan application. According to the department, it is important to submit a loan consolidation application by April 30, 2024 if you wish to consolidate your loan(s) and take advantage of the adjustment.

Standard Student Loan Forgiveness Rules Will Be Reinstated in July

Individuals who do not meet the requirements for immediate discharge (i.e., falling short of the 20-year or 25-year threshold) will still be able to retain their retroactive IDR credit through the account adjustment once the program is finalized in July. However, borrowers must continue making loan repayments under an IDR plan to make progress towards loan forgiveness.

The Biden administration has implemented new regulations as part of the SAVE plan. This innovative IDR plan aims to provide a more affordable option compared to others. These regulations will enable certain periods of deferment and forbearance to contribute towards loan forgiveness, even after the account adjustment period concludes. In contrast to previous IDR regulations, most deferment and forbearance periods were not considered for loan forgiveness. However, the new exceptions, although broader than before, will still be significantly limited compared to what is allowed under the account adjustment. In addition, loan forgiveness will no longer take into account payments made under non-IDR plans.

The Education Department intends to release IDR payment counts in July. Borrowers will be able to easily access information about their IDR loan forgiveness credit and remaining repayment term.


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