On April 19, 2022, the Department of Education announced a temporary program to update the IDR payment counts for many federal student loan borrowers.
The exact details, explained below, are a bit complicated. As a result, this monumental change might be missed by some borrowers.
What is so significant about the change?
Millions of federal borrowers just got closer to student loan forgiveness. The Department of Education estimates that 40,000 will receive forgiveness.
Updating IDR Payment Counts Fixes a Major Issue
To understand how the changes apply to your student loans, it is helpful to know why the changes were made.
Income-driven repayment plans like IBR, PAYE, and REPAYE help borrowers afford their monthly student loan payments, even if they have a large balance. Crucially, these plans also provide a path to debt freedom. Borrowers on IDR plans can have their debt forgiven after 20 or 25 years, depending on the plan.
The first income-driven repayment option was created in 1994. To this day, the representatives at many student loan call centers don’t fully understand how IDR works and how it can help borrowers. As a result, many borrowers have been given bad advice from their servicer over the past 30 years.
Some borrowers were placed on a deferment or forbearance when an IDR plan would have been a better choice. Others were enrolled in extended or graduated repayment plans instead of an IDR plan. Unfortunate advice like this caused borrowers to delay or completely miss out on student loan forgiveness.
Forbearances, Deferments, Extended, and Graduated Repayment
During this one-time update of borrower IDR count, many previously ineligible repayment plans and payment statuses will now get borrowers closer to the required 20 or 25 years worth of IDR payments.
Deferments — Previous periods of borrower deferments will get credit as IDR repayment time. The one exception is in-school deferments, as outlined below.
Forbearances — If a borrower has 12 consecutive months of forbearance, or a total of 36 months of forbearances, the borrower receives credit for IDR payments during this period.
All Repayment Plans — Borrowers who were “In Repayment” get credit as time towards IDR forgiveness, regardless of the repayment plan they were on.
Activity Before Consolidation — Historically, consolidating your loans meant “restarting the forgiveness clock.” Under the new policy, this time will get added as progress towards IDR forgiveness.
Important Note: The rules for IDR forgiveness have not changed. Instead, borrowers receive a one-time credit for previous periods that were not eligible.
Borrowers still need to enroll in an IDR plan if they want to earn additional progress toward loan forgiveness.
What Doesn’t Count Under the Updated Rules?
Most borrowers are likely to see their tally towards IDR forgiveness jump considerably.
However, a few exceptions will limit the benefit to some borrowers.
In-School Deferments — If you were on an in-school deferment, you will not receive credit for this time. Even if you made payments during school, the time does not count.
Grace Period — All borrowers receive a six-month grace period after finishing school before payments start. This time will not count towards IDR forgiveness.
FFEL Loans — The most significant exception is that borrowers with FFEL loans will not benefit from this program. However, it is possible to work around this issue. (see the next section)
Steps Borrowers Must Take
The good news for borrowers is that these updates happen automatically.
The one exception is commercially-held FFEL loans. If you have an FFEL loan, or a privately held Perkins or HEAL Loan, you should consolidate by April 30, 2024, which is the date the Department of Education expects to start updating the borrower counts.
Many borrowers delayed consolidating for fear of losing progress towards forgiveness. The new policy temporarily allows FFEL borrowers to consolidate without starting from the beginning. Better yet, it’s also a great opportunity for FFEL borrowers who are chasing PSLF.
IDR Count Adjustment Timeline
The Department of Education expects to complete the update of the IDR payment records at some point in 2024 for most borrowers.
However, it is worth noting that this update has already been pushed back multiple times from the originally planned date in January 2023, and it is possible that further delays will happen.
The one exception to this timeline is for borrowers who are nearing the number of payments required for IDR forgiveness. These borrowers should receive their update and details on forgiveness by the spring of 2023 according to the Department of Education. If you think you have already reached the 20 or 25 years necessary to earn IDR forgiveness under these new rules, now is the time to reach out to your servicer.
Timeline Adjustments: The multiple delays on this update are undoubtedly frustrating for borrowers, and this appears to be a lower-priority item from the Department of Education.
If there is good news in this situation, it is that the update may happen after the federal student loan repayment restart. This may increase the number of borrowers who research this issue and benefit from the program.
How to Find Your Payment Status History
Payment histories are notoriously difficult to track down. Loans often move from one servicer to another. Information sometimes gets lost in the transition.
Fortunately, studentaid.gov has records of your payment status history. To find these records:
- Log in to studentaid.gov.
- In the My Aid section of the dashboard, click on View Details.
- Next, scroll down to the loan breakdown at the bottom of the page.
- Click on the View Loans dropdown.
- This will pull up a list of your student loans.
- Select View Loan Details for the loan that you want to review.
- In the top section, there is a link for Loan Status History.
The loan status history should show periods of repayment, deferments, and forbearances.
In my current loan, it will be forgiven after 120 payments. It looks like after consolidation, it will be forgiven after 20/25 years, which is 240 payments. Is that correct. I am 83 payments in two loans for 160,00 and 11 payments in a Parent Plus loan. I am worried that my 83 wont carry over or that I will be paying for 20 years instead of 10 years.
When you say it looks like after consolidation that you will have 20/25 years, are you basing it on the Loan Simulator on studentaid.gov? If so, that is not accurate. For whatever reason, the laon simulator seems to assume you are starting repayment and does not incorporate your repayment history when making the estimate.
One of the advantages of the adjustment is that you can consolidate now, and get credit for your previous payment activity. Things get tricky for you because you have Parent Plus debt. Including Parent PLUS loans in a consolidation loan normally results in limited repayment plan options, but the double-consolidation loophole can be used to avoid this issue.
Finally taking the HUGE risk of consolidating although I have a 30-year-old previously consolidated twice school loan. 60% of that loan is pending ‘borrowers defense’ from one of the listed for-profit fraudulent schools for an education that was worthless. Pending because I could not proceed with applying due to their glitches and was two days late after they resolved it. My concern is the wording in H. on the consolidation application. Does this mean I forfeit my borrowers defense case? I may not get anything on my one-time payment count – if it even happens – because my last consolidation was not long ago to attend an accredited 4yr. Thanks!
There are some tricky questions here Michele.
I completely understand your concern about the working of section H. I will say that if you look at section J, it specifically says that previous progress toward IDR forgiveness or PSLF will not count. However, the Department of Education is saying the opposite. I’ve been pointing out to people that this is an older form and at the time the warning in section J was accurate.
Whether the same applies to section H is an open question in my book. I’d encourage you to reach out to your servicer and the Department of Education to verify that consolidation will not mean you forfeit your borrower defense case. That said, hopefully it is a moot quesiton, because your 30 year old debt is hopefully at or beyond the required payments for IDR forgiveness.
US Dept of Ed and servicer swear by, my loan count restarts after the last consolidation, 19 yrs after the first. Yes – in repayment for 20years and owe almost triple! They all say I need to consolidate all by 4/30 so the new school loan can be the same payment count. It’s a scam! I just read all of the Federal Register “Student Debt Relief for the William D. Ford Federal Direct Loan Program (Direct Loans), the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins) Program, and the Health Education Assistance Loan (HEAL) Program” available online now and that is allowing public comment for 29 more days. From what I read, consolidating WILL NOT give my newer school loan the same count as the old because IF THEY DO IT – they will exclude the new loans not consolidated before 07/2023, before anyone knew about the consolidation possibilities that came out 09/23. However, consolidating will increase my current loan %’s of 3.5-5.5% on 26k (about 15 loans – 1 per semester for unsub and sub) to 6.5% (taken from the average of all current loans that is including the old loan of 37k now at 8.5% with an original pay off balance of 11k in 1994)! I have been asking for the math for 8 months, something in writing, from everyone. I went as far as hiring a lawyer to look at the legality of the writing with an attorney that follows this closely and noone can answer. I think this request for comment document is the closest to the legitimate truth (even showing what is proposed and argued) that I have found since US Dept of Ed and Nelnet implored me to quickly consolidate all. I am SO happy I did not, I just did the consolidation so I could view what the cost and interest rate would be and now I now to quickly rescind. I hope this information can be helpful to other life long payers such as myself! This also means, I should put my 2013-2017 loans on standard repayment plans versus stuck for 20 years at extremely high prices.
Hi Michele,
The benefit of this one time adjustment is that if you have any federal loans, certain periods of deferments, forberances and payments on non-IDR plans may not count toward IDR forgiveness. For most borrowers, no enrollment is necessary, but if you have FFEL loans consoldiation before 4/30 is required.
One of the few downsides of consolidating right now is that by combining your loans, it means a combined interest rate. They use a weighted average rouned to the nearest 1/8th percent. The intention here is that your total monthly interest charges stay approxmiately the same. This does make it impossible to pay off the high interest loan first, but based on what you have shared in your comment, consolidating should bring you very close to IDR forgiveness, so it shouldn’t matter.
Hi Michael, I am reaching out after speaking to 3 attorneys and speaking to my servicer and US Dept of Ed (Who all have been imploring me to consolidate for this reason) at least 30 times since Oct 23 and ALWAYS getting a different answer or an “I don’t know”.
I went to a defaulted trade school that I got nothing out of, and I was lied to on everything in 1991. I missed the date by 2 days because the system wouldn’t work. I was never offered IDR. I even complained several times to the Ombudsman’s office, and they didn’t care (pre-internet and email). The only options I ever had was pay in full, don’t pay at all, forbearance, deferment, or consolidate. The later happened twice because I was told I had no other options (the first time to avoid garnishment and the second to go to a real college in 2013 and get a bachelor’s degree). The later 18 loans are what they want me to consolidate with the original loan. However, I am now being told that none of my payments from 1994 through when I consolidated to go to a college from 2013-2017 count toward a one time payment count because I consolidated to get a loan to FINALLY attend a real college. I just need an honest answer if that is correct because if so, with the current interest rates, it would probably prove foolish for me to combine the lower amount recent loans that are between 3.5% – 5.5% with the $37,000 old amount at 8.25% anc chance them all be higher when I will have to pay for a time that now doesnt start until 2017. (Even though I have already put enough time in over the last 34 years if you didn’t count those forces consolidations). PLEASE! Any information, even if it’s not what I want to hear, would truly help this buried, 50-year-old, only parent who just bought her first house 4 years ago and is drowning, not spend her entire adult life in crippling debt until death!
Hi Ehm,
I know you are looking for a definitive answer to your question, but I can’t really give you one without chatting with you in more detail about your situation.
What I can say is that payment activity from before your 2013 consolidation should count toward IDR forgiveness progress once the one-time update is complete. However, if you had older loans that you repaid in full, that time may not count.
I’d also encourage you to check out this article that explains forgiveness timelines and the impact of consolidation.
Thank you. I never repaid any loans however; they were sold to new companies which I had no control over.
In that case, you should get credit for payments made before the consolidation (once they do the one-time update described in this article). I’ve spoken with other borrowers in a similar situation as you. My hope is that the one-time update gives you credit for activity from before your consolidaiton, but if it doesn’t, you will be able to request a manual review later in the year.
I have a total of 25 ! loans, dating back to 1988-1990-Perkins, paid in full. I was in grad school 1990-1998, so most of my loans start there. I’ve since gotten three degrees, my last loans were disbursed in 2019. I’ve consolidated repeatedly over the years, spent many years in forbearance and deferment and repayment (back and forth). I have applied for PSLF and on my older loans I have 106 qualifying payments. The others are around 63. I think I should consolidate them all, to get the older in with the newer to get benefits from IDR Adjustment. Is that a good idea? How far back will they count my loans (am I there yet??).
Great questions here, Shannon!
It’s hard for me to answer anything definitively as I only have the limited information you’ve provided in this comment, but I think I can shed some light on your situation.
First, the bad news: the loans that are now paid in full don’t really enter the forgiveness progress equation. For the purposes of the update, it will be as if those loans never existed.
Now for the good news: right now you have a limited opportunity to consolidate all of your student loans so that they match the progress of your oldest loans. It’s a limited opportunity because it requires taking advatange of a temporary program set to end next month. My previous article on the temporary program and how consolidation impacts the forgiveness clock should help you make sense of things.
Thank you! I will definitely consolidate! One other question is about the PSLF. That program doesn’t count anything before 2007. But if I combine loans with dates that go back to 1998 with more recent loans, will the PSLF count include the payments made before 2007? I’m not sure how those two programs run in tandem. Do I basically watch to see which one gets me to the finish line, sooner? Thank you again!!!