The Department of Education (DOE) announced on May 15, 2024, that it will extend the consolidation process for the IDR One-time Adjustment program. The program’s recent deadline was April 30, 2024, which was extended from the original date of December 31, 2023. This extension is good news for borrowers who may have missed this deadline.
The IDR Adjustment program is intended to help borrowers who received misinformation or poor advice while trying to qualify for loan forgiveness. Borrowers who are in repayment for a more extended period will benefit the most.
With this extension, the DOE also announced that the adjustment process will not be completed until September. The original account adjustments were expected to be completed in July after the current Blackout Period.
Reasons for IDR One-Time Adjustment Extension
The DOE recognized that people who missed the extension would be penalized if they did a consolidation after May 1 through June 30, 2024. The consolidations would follow the old consolidation rules and reset the credit months to zero.
New consolidation rules using a weighted average process will go into effect on July 1, 2024.
Who Will Benefit From the IDR One-Time Adjustment
The goal of the IDR One-Time Adjustment program was to correct prior misinformation about loan forgiveness. The most common errors were people with Federal student loans or people in the wrong repayment method.
- Many borrowers had FFEL loans, which are a type of federal loans, but the forgiveness programs required Federal Direct Loans only. FFEL loans were no longer issued after 10/2010.
- Borrowers were told that all repayment methods could be used to qualify for forgiveness, yet only Income-Driven Repayment (IDR) methods qualified under the rules.
Here are the other benefits that the IDR One-time Adjustment will fix:
- Any months in a repayment status, regardless of the payments made, loan type, or repayment plan – A student loan consolidation may be required
- Twelve or more months of consecutive forbearance or 36 or more months of cumulative forbearance
- Any months spent in economic hardship or military deferments in 2013 or later.
- Any months spent in any deferment (except in-school deferment) before 2013.
- Any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a consolidation loan
These credit months are not just for borrowers trying to qualify for Public Service Loan Forgiveness (PSLF). They will also help borrowers try to qualify for end-of-term forgiveness, which is offered after 20 to 25 years of repayment.
Typically, end-of-term forgiveness is considered taxable income, but under the CARES Act, all student loan forgiveness is tax-free through 12/31/2025. This type of forgiveness could greatly benefit borrowers with older loans.
Current Program Benefit Amount
Between the PSLF Limited Waiver and the IDR One-Time Adjustment program, the administration has approved approximately $160 billion and impacted almost 4.6 borrowers. These two programs are the most successful student loan forgiveness program.
These are not permanent programs and have deadlines. The administration is evaluating other options to make college more affordable.
PayForED and our designated professionals offer consulting services to help borrowers navigate this process. Under these programs, PayForED’s average savings per client exceeded $100,000.
