S T U D E N T D E B T M O D I F I C A T I O N S

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Income Driven Repayment Loan Forgiveness

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Income-driven repayment plan forgiveness writes off your remaining loan balance after 20 or 25 years of monthly payments.

Income-driven repayment plans help borrowers stay out of default and in good standing by giving them an alternative to making payments on a 10-year standard repayment plan. Each plan ties monthly payments to a portion of your discretionary income and stretches the repayment period from 10 years to 20 to 25 years. They also come with another benefit: the federal government will write off the outstanding balance after two decades of payments.

These bonuses don’t apply to private student loans. Ask your lender if they offer any options for private student loan relief.

The U.S. Department of Education recently announced it would use a one-time revision that will push millions of borrowers closer to IDR forgiveness by counting:

Past payments toward the 240 or 300 needed for IDR forgiveness.
Months spent in deferment  except for in-school deferment before 2013 as qualifying payments.
Forbearances of over 12 consecutive months and over 36 cumulative months.
The department will implement these account adjustments right away. But borrowers will have to wait until the end of the year before they get an updated IDR payment count.

One-time waiver and adjustments.

In April, 2022 the Education Department announced it would use a one-time account adjustment to retroactively credit borrowers with more payments toward loan forgiveness. The changes address three long-standing problems caused by student loan servicers:

  • Borrowers struggling to make their student loan payments were steered into long-term forbearances instead of being guided into income-driven repayment plans, which would have given them an affordable monthly payment.
  • Once in forbearance, borrowers were allowed to stay there for much longer than permitted.
  • Borrowers didn’t get an accurate count of qualifying payments made on income-driven repayment plans.

The department estimates the adjustment should cause:

  • Immediate debt cancellation for at least 40 thousand government and nonprofit employees under the Public Service Loan Forgiveness Program.
  • Thousands of people who’ve been paying their loans for at least 20 years will have their remaining balances erased.
  • Over 3.6 million borrowers will move at least three years closer to income-driven repayment forgiveness.
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