01/28/2023
Student Loan Forgiveness Credit Under PSLF Waiver and IDR Account Adjustment
Adam S. Minsky Senior Contributor
Student Loan Forgiveness Credit Under PSLF Waiver and IDR Account Adjustment
Two temporary Biden administration initiatives also allow certain past periods of deferment and forbearance to count towards student loan forgiveness — the Limited PSLF Waiver, which ended last October, and the IDR Account Adjustment, which is ongoing.
Under these initiatives, the Education Department can count the following towards a borrower’s student loan forgiveness term under PSLF and IDR:
12 or more months of consecutive forbearance;
36 or more months of cumulative forbearance over a loan’s repayment term;
Any months spent in economic hardship or military deferment after 2013;
Any months spent in any deferment (with the exception of in-school deferment) prior to 2013.
The PSLF Waiver ended on October 31, but the IDR Account Adjustment is just getting started and extends many of the benefits of the PSLF Waiver. Importantly, “Borrowers who have commercially managed FFEL, Perkins, or Health Education Assistance Loan (HEAL) Program loans should apply for a Direct Consolidation Loan by May 1, 2023, to get the full benefits of the one-time account adjustment,” according to the Education Department.
Note that the Covid-related student loan pause does not count towards a borrower’s 12 consecutive months or 36 cumulative months of forbearance under these initiatives (but, as noted above, the Covid forbearance itself can count towards loan forgiveness).
Some Deferment and Forbearance Periods May Count Towards Student Loan Forgiveness Under New Regulations
While the sweeping deferment and forbearance credit will benefit millions of borrowers, the PSLF Waiver and IDR Account Adjustment are one-time, temporary initiatives.
However, the Biden administration has also released proposed regulations that will make more lasting changes to federal student loan forgiveness programs. While not quite as generous as the one-time initiatives, these reforms would allow certain deferments and forbearances to count towards IDR and PSLF student loan forgiveness once the temporary programs end. This includes the following:
Cancer treatment deferment;
Military service deferment;
Post-active-duty student deferment;
Economic hardship deferment, which includes service in the PeaceCorps; AmeriCorps and NationalGuard service forbearances;
U.S. Department of Defense Student Loan Repayment Program forbearance;
Administrative or mandatory administrative forbearances.
In addition, under an overhaul of Income-Driven Repayment the Biden administration announced earlier this month, “Borrowers in other types of deferments and forbearances would have some opportunity to make catch-up payments to help them get back on track toward loan forgiveness.” This will provide borrowers with “a path to receive credit for other periods in deferment or forbearance that are not being credited automatically,” according to an Education Department fact sheet. Most of the new regulations are set to go into effect for PSLF on July 1, 2023. The implementation timeline for the new IDR regulations is less clear, however.
