| Many student loan borrowers have an opportunity to have their entire student loans cancelled or receive more credit towards cancellation. But there is an impending deadline that requires immediate action from certain borrowers who have student loans. While any borrower is potentially eligible, older borrowers are more likely to need to take immediate action because of the types of loans these borrowers frequently have. Legal assistance and elder rights advocates can help borrowers get the information they need so that they can get their loans cancelled as soon as possible. The Consumer Financial Protection Bureau has shared helpful information for advocates and borrowers. WHAT: The U.S. Department of Education (ED) will be conducting a one-time payment count adjustment. Specifically, ED will give borrowers credit towards loan cancellation through its Income Driven Repayment program (IDR) for repayment periods since July 1, 1994, and for certain deferments and forbearances. IDR programs result in loan cancellation after 20 or 25 years of eligible payments; the account adjustment will ensure borrowers receive credit for the maximum number of eligible payments based on their loan history. This program has already resulted in cancellation of loans for more than 800,000 borrowers. In addition, IDR plans can make monthly payments more affordable by capping monthly payments based on borrowers’ income and family size, not loan balances. Most federal student loans qualify for at least one IDR plan and federally held loans will automatically be subject to the pay count adjustment. However, some loans aren’t eligible for these programs unless consumers take further action. WHO: ED will apply the account adjustment to most federally held student loans. However, consumers who have certain types of loans must first consolidate their loan into a Direct Consolidation loan to maximize the effect of the account adjustment. These loans include: - Parent PLUS,
- Commercially managed Federal Family Education Loan (FFEL),
- Perkins loans, and
- Health Education Assistance Loan (HEAL) Program loans.
How can borrowers tell if they have FFEL loans — and whether they are privately held? Log in to their account at www.studentaid.gov. The information needed is in the Loan Breakdown section of the dashboard. To get there, look for “My Aid” in the dashboard and click “View Details.” Then click “View Breakdown” or scroll down to the Loan Breakdown section. Borrowers only need to worry about loans with a balance and can ignore loans that show a $0 balance. Here you will see the names of the loan servicer(s). If the name of a servicer starts with “Dept of Ed,” those loans are federally-held and do not need to be consolidated. If it says “Default Management Collection System,” those loans are in default; visit myeddebt.ed.gov or call the Default Resolution Group at 1-800-621-3115 to take advantage of the new “Fresh Start” program to get out of default and be included in the account adjustment. Loans that have any other servicer names are privately-held and must be consolidated to benefit from the account adjustment. WHEN: The one-time pay count adjustment will occur in Summer 2024. But borrowers who have non-federally held loans must consolidate their loans into a Direct-Consolidation Loan by APRIL 30, 2024. ACTION STEPS: - Determine if the borrower has a loan that must first be consolidated into a Direct-Consolidation Loan, in order to benefit from the account adjustment. Loan information can be found on StudentAid.gov or by calling ED at 1-800-433-3243.
- If yes, determine if the borrower would like to consolidate their loan into a Direct-Consolidation Loan by the deadline of April 30, 2024.
- If appropriate, ensure the borrower will continue earning credit towards loan forgiveness after April 30, 2024 by enrolling in the Income Driven Repayment program.
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