A problem that needed to be fixed
Income-Driven Repayment (IDR) plans allow student loan borrowers to make monthly payments on their student loans based on their income and family size and have any remaining balance on their loans canceled or forgiven after 20-25 years of repayment. However there have been huge problems with how the IDR plans were managed and how records were kept. Because of these problems, only a handful of borrowers ever had their loans forgiven through IDR loan forgiveness, even though millions of people should have been eligible. In addition, similar problems have prevented millions of eligible borrowers from having their loans forgiven through Public Service Loan Forgiveness.
To help fix these issues, the Department of Education announced a one-time payment count adjustment program to help give borrowers more credit toward forgiveness through IDR or PSLF. The one-time account adjustment should help millions of borrowers get one step closer to loan forgiveness.
Many borrowers may also have their loans automatically canceled and forgiven before repayment starts again in September 2023 and may even get refunds for payments made after they reached the point of cancellation if the Department of Education determines that they are eligible for forgiveness under IDR or PSLF.
What will count when the payment count adjustment is applied?
Under the account adjustment, any time in repayment after July 1, 1994 will now be counted as IDR-qualifying months, even if you were not enrolled in an IDR plan at the time. This time will also count toward PSLF loan forgiveness as long as you meet the other employment requirements for PSLF. See our page on PSLF for more information on how the IDR account adjustment will help PSLF borrowers.
This means that the Department will now count all of the following time toward IDR or PSLF loan forgiveness:
- any months in a repayment status, no matter how much was paid, or what repayment plan you were on;
- 12 or more months of consecutive forbearance or 36 or more months of total forbearance (you can also submit a complaint to the Federal Loan Ombudsman to ask that shorter periods of forbearance be counted if your loan servicer told you that you weren’t eligible for IDR);
- any months spent in economic hardship or military deferments after 2013;
- any months spent in any deferment (except in-school deferment) prior to 2013; and
- for consolidated loans, any time in repayment for the loans before they were consolidated.
Unfortunately, not all time will count toward the payment count adjustment. The following will not count toward IDR or PSLF loan forgiveness:
- time in default if you defaulted on your loans before the COVID-19 payment pause;
- in-school deferments and most grace periods after the borrower left school; and
- any months where your loans were subject to a court-judgment.
What loans are eligible for the payment count adjustment?
All Direct Loans and FFEL or Perkins loans owned by the Department of Education are eligible for the account adjustment, including Parent PLUS loans.
Commercially-held FFEL Loans, Perkins Loans that are held by a school and Health Education Assistance Loans (HEAL) are not eligible for the IDR account adjustment unless they are consolidated into a new Direct Consolidation Loan before December 31, 2023. For information on consolidating your loans, see our consolidation page.
Do I have to take any steps to apply for the payment count adjustment?
If you have a loan that isn’t held by the Department of Education, such as a commercially-held FFEL loan, school-held Perkins Loan, or a HEAL Loan, you will need to consolidate your loan into a new Direct Consolidation Loan before December 31, 2023, to get credit for that loan under the account adjustment.
If your loans are all held by the Department of Education, then you do not need to take any additional steps to get credit under the payment count adjustment. But if you don’t have enough time to have your loans forgiven under IDR or PSLF loan forgiveness after the account adjustment, you will need to sign up for an IDR plan going forward if you want to keep earning credit toward IDR or PSLF loan forgiveness.
Don’t know who holds your loans? Visit our page on loan holders for more information on how to find out if your loans are held by the Department of Education or a commercial lender or school.
Parent PLUS borrowers seeking PSLF or IDR loan forgiveness: Normally Parent PLUS Loans are not eligible for IDR unless you consolidate first into a Direct Consolidation Loan. Under the account adjustment, you will get credit toward IDR loan forgiveness (and PSLF if you had qualifying employment and submit an application) even if you haven’t yet consolidated. However, in order to keep earning credit toward IDR loan forgiveness, you will need to consolidate your Parent PLUS Loan into a new Direct Consolidation Loan and then sign up for an Income-Contingent Repayment (ICR) plan. Right now, you will not lose any time in repayment when you consolidate, so if you have Parent PLUS Loans, you should consider consolidating before the December 31, 2023 deadline.
When will I find out about how my loans were adjusted?
The Department of Education is working to review all borrowers’ loans for the IDR account adjustment right now, but it will likely take a long time to finish the process. Some borrowers have already been told their loans are being forgiven through this process, but if you are not at the point of cancellation yet, you may not hear anything about your eligibility for the IDR account adjustment until well into 2024.
The Department of Education has stated that it is trying to prioritize adjusting accounts for people who are already eligible or close to being eligible for loan forgiveness under IDR or PSLF loan forgiveness.
If you think your loans should be forgiven under the IDR account adjustment before repayment starts again in September, you should contact your loan servicer or file a complaint with the FSA Ombudsman.
If you do not have enough qualifying time toward loan cancellation or forgiveness yet and are concerned about repayment, visit our page on returning to repayment for more guidance on how to prepare.
More information on the payment count adjustment
More information on the account adjustment can be found on the Department of Education’s website.
You can also view them below:
- The Income-Driven Repayment (IDR) Account Adjustment: Moving Millions of Borrowers Closer to Cancellation
- The Income-Driven Repayment Account Adjustment Effectively Extends Many of the Flexibilities Announced As Part of the Public Service Waiver That Expired On October 31, 2022
- A Major Flaw in the IDR Account Adjustment: Excluding Time in Default