IDR Account Adjustment

If you have commercially held FFEL loans, you can only benefit from the IDR Account Adjustment if you consolidate by the end of 2023. For more information or to consolidate, please visit StudentAid.gov/consolidation.

On April 19, 2022, the U.S. Department of Education (ED) announced several changes and updates that will bring borrowers closer to forgiveness under income-driven repayment (IDR) plans. These adjustments to borrower accounts include conducting a one-time adjustment of IDR payment counters to address past inaccuracies and permanently fixing IDR payment counting by reforming ED’s IDR tracking procedures going forward.

Based on the newly eligible months from the one-time account adjustment, borrowers who have reached 240 or 300 months' (as applicable) worth of payments for IDR forgiveness or 120 months of PSLF will begin to see their loans forgiven in spring 2023. The Department will continue to discharge loans as borrowers reach the months needed for forgiveness. All other borrowers will see their accounts update in 2024. For more information, please visit StudentAid.gov.

One-Time Payment Count Revision for Eligible IDR Borrowers

• As part of this initiative, ED will conduct a one-time revision of IDR-qualifying payments for all William D. Ford Federal Direct Loan (Direct Loan) Program and federally managed Federal Family Education Loan (FFEL) Program loans.

• ED will conduct a one-time account adjustment to borrower accounts that will count time toward IDR forgiveness, including

  • any months in a repayment status, regardless of the payments made, loan type, or repayment plan;

  • 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance;

  • months spent in economic hardship or military deferments after 2013;

  • months spent in any deferment (with the exception of in-school deferment) prior to 2013; and

  • any time in repayment on earlier loans prior to consolidation of those loans into a consolidation loan.

• Any borrower with loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if you are not currently on an IDR plan.

• Borrowers who have commercially managed FFEL, Perkins, or Health Education Assistance Loan (HEAL) Program loans should apply for a Direct Consolidation Loan by the end of 2023, to get the full benefits of the one-time account adjustment.

• In many cases, if borrowers made qualifying payments that exceed the applicable forgiveness period (20 or 25 years), those borrowers will receive a refund for their overpayment.

• ED will provide more information about how this process will work for joint (spousal) consolidation loans as it implements the Joint Consolidation Loan Separation Act.

• Borrowers with loans in default can benefit by getting out of default — including through the Fresh Start initiative — before the account adjustment. Time in default will not be counted toward IDR.

Permanent Fixes to IDR Payment Counting

• In addition to issuing new guidance to student loan servicers to ensure accurate and uniform payment counting practices, ED will track payment counts in our own modernized data systems.

• ED is undertaking an effort to display borrower IDR payment counts on StudentAid.gov so that you can view your progress yourself.

• Additionally, ED is working on regulations to revise the terms of the IDR programs to simplify payment counting, which includes proposals to allow more loan statuses to count toward IDR forgiveness, including certain types of deferments and forbearances.

Effects on Public Service Loan Forgiveness (PSLF) Applicants

• 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 of time if you certify qualifying employment.

• These changes will be applied automatically to all PSLF-eligible Direct Loans, including consolidated and unconsolidated parent PLUS loans. If you believe you might benefit, you should update your employment certification history to reflect all periods of public service employment.

• Borrowers with commercially or federally held FFEL loans who consolidate those loans into Direct Consolidation Loans before the account adjustment is applied will also get PSLF credit.

Estimate of Impact

• More than 3.6 million borrowers will receive at least three years of credit toward forgiveness under IDR.

• Also note that any debt forgiven as a result of the one-time IDR account adjustment will not create a federal tax liability for you. The American Rescue Plan Act included a provision temporarily modifying the tax treatment of discharged student loan debt. Specifically, the law excludes from gross income qualifying student loans that are discharged between December 31, 2020, and January 1, 2026. During this period, the amounts of forgiven student loan debt will not be subject to federal taxation. However, the amount of the forgiven loan could be taxable in some states.