A key deadline for student borrowers is coming up this month that could result in some debtors having their remaining balances forgiven.
The Biden administration has set an April 30 deadline for certain student borrowers who have multiple federal loans to get relief under the IDR Account Adjustment. Those who are on an income-driven repayment plan or Public Service Loan Forgiveness program with older-style Perkins or FFEL federal student loans have until this date to consolidate their loans and qualify for a payment count adjustment that will put them closer to forgiveness, with some even able to get refunds if they have overpaid.
The IDR Account Adjustment is part of a wider push by the White House to expand student loan forgiveness. Following previous plans getting struck down by the U.S. Supreme Court last year, the president revealed a slew of new plans to reduce the debt burden on those who have pursued higher education, including the Saving on a Valuable Education plan, which has reduced monthly payments or forgiven student debt entirely for qualifying borrowers.
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Announced in 2022, the payment adjustment is designed to rectify past administrative errors by the private companies that collect federal student loan payments. The Department for Education explained that there “were a variety of reasons why some months may not have been credited toward loan forgiveness—for example, months when you were in a payment plan that wasn’t eligible.”
Under the adjustment, longtime borrowers can receive retroactive credit toward their loan forgiveness under the income-driven repayment and PLSF plans by allowing more payments to count as credits. The PSLF erases any remaining debt after 10 years of payments.
If you qualify for the IDR Account Adjustment, one of three things will happen to your student debt, depending on how long ago you took out the loan:
- You still have more time left until the end of your repayment period: you will be closer to the end of your repayment period and closer to forgiveness.
- You reach the end of your repayment period: you will automatically receive loan forgiveness.
- You have more than the number of months required in your repayment period: you’ll receive a refund for any overpayment.
As of December, the department had forgiven $46 billion for 930,500 borrowers through the IDR program, according to a report by Investopedia.
Newsweek has contacted the Department for Education for comment via email outside of normal working hours.
To apply to consolidate your loans before the deadline, click here.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.