Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
The highest priority that the Department of Education should be focused on now is updating borrowers’ payment counts with the IDR adjustment/audit.
We have had so many people benefit from this over the past couple years – but there are still large numbers of people who have consolidated their Direct loans under the promise of the IDR recount and they are waiting for the recount…
Haven’t heard of this before?
For many years, student loan servicers steered struggling borrowers into forbearance instead of guiding them toward income driven repayment. Income driven payment generally caps payments at no more than 10 percent of income, and ultimately leads to loan forgiveness after 20 or 25 years of repayment. Many of these loan servicers also failed to accurately track borrowers’ progress toward forgiveness. Some of these companies had no system for tracking payments and identifying when borrowers would qualify for forgiveness.
The Department of Education created a one-time automatic waiver called the IDR Account Adjustment or Audit to increase borrowers’ payment counts toward income-driven repayment plan forgiveness.
How does this recount work?
- Full and immediate forgiveness for those who have already paid for 20 years if undergrad loans; or 25 years for grad loans.
- Recount/audit for extended forbearances (this is huge, most deferments except for in school deferments count as well).
- No loss of prior IDR payment history for consolidation to Direct Loans if done before the June 30, 2024 deadline (usually a consolidation wipes the slate clean of any prior IDR time).
- A consolidation of loans for the IDR recount will cause all loans to redate the IDR start date to the earliest repayment period – so if you began repayment in the late 1990s, even if you had extended forbearances, and even if it was a payment on a loan previously placed in this or another consolidation, it would cause your payment history on all loans to redate to the 1990s for IDR purposes.
- Deadline of June 30, 2024 to consolidate any commercially held FFEL loans to participate in the program. If you are uncertain whether your FFEL loans are commercially held or held by the Department of Education, please consider consolidating to Direct. All Direct loans will automatically qualify, provided the consolidation application is submitted by June 30, 2024.
- There is no separate IDR Waiver form or application as this one time audit will occur automatically for all eligible loans (department held FFEL or Direct Loans).
- The audit will apply to Parent Plus loans.
- If you borrowed less than $12,000, the loans would be forgiven after 10 years of payments.
What time will count under the IDR Waiver?
The IDR Audit will give credit for:
- Borrowers making monthly payments even if they weren’t in an IDR plan.
- Months spent on deferment (except for in-school deferment) before 2013.
- After 2013, you must have been in a specific type of deferment such as active-duty or economic hardship. Most types of deferment qualify without a time requirement as with forbearance.
- Extended forbearances that lasted over 12 consecutive months or 36 or more months cumulatively.
Any time periods above back to July 1994.
This IDR adjustment is automatic and will occur for all Direct loans. While the deadline for borrowers to consolidate to Direct loans or consolidate existing Direct loans was June 30, ED is still working on the monthly reviews. Two months left! I hope ED is on track to finish these up.
