Important Deadline: June 30th for FFEL Loan Holders
Understanding the IDR Account Adjustment
FFEL Student Loan Forgiveness Deadline 2024: The IDR account adjustment presents a significant opportunity for borrowers seeking credit toward Public Service Loan Forgiveness (PSLF) and/or Income-Driven Repayment (IDR) forgiveness. This adjustment allows for past payments, which typically would not qualify, to be counted towards these forgiveness programs. Action may be required based on the types of loans you hold and the forgiveness option you are pursuing. Continue reading for a detailed guide on the necessary steps to take before the June 30, 2024 deadline.
Step 1: Review Your Outstanding Loan Types
First, identify the types of loans you currently have. If you are unsure, log into studentaid.gov to check your loan details. I have prepared a brief YouTube tutorial to guide you through this process. Specifically, this tutorial will help you determine if your FFEL loans are commercially held or held by the Department of Education.
Step 2: Determine Your Forgiveness Path
After identifying your loan types, the next steps depend on whether you are pursuing PSLF or IDR forgiveness. Here’s a concise overview of each option:
Public Service Loan Forgiveness (PSLF) The PSLF Program forgives the remaining balance on Direct loans after 120 qualifying monthly payments under an income-driven repayment (IDR) plan, provided you work full-time for a qualifying employer. The four IDR plans include SAVE, PAYE, IBR, and ICR. Importantly, loans forgiven through PSLF are not subject to federal tax.
Only Direct loans are eligible for PSLF. If you have federally-held or commercially-held FFEL/FFELP loans, a consolidation application must be submitted by June 30, 2024. Further details are provided below.
Income-Driven Repayment (IDR) Forgiveness Under an IDR plan, the remaining loan balance is forgiven after 20 or 25 years of payments. Typically, this forgiven amount is considered taxable income. However, it is currently exempt from federal taxation until 2025, with most states also pausing state taxation. Note, some states tax still tax the forgiveness.
Only Direct and federally-held FFEL/FFELP loans qualify for IDR forgiveness. If your loans are commercially held, you must submit a consolidation application by June 30, 2024. More information follows.
Step 3: Determine Your Action Steps
Once you understand your loan types and the forgiveness path you are pursuing, use the chart below to determine your next steps. If consolidation is required, you must submit a consolidation application on studentaid.gov by June 30, 2024, to preserve your progress.
Action Items Chart By consolidating by June 30, 2024, you can receive credit for past payments towards PSLF or IDR forgiveness that would not otherwise count. Failing to meet this deadline could result in starting over from payment zero.
Adhering to these steps and meeting the FFEL student loan forgiveness deadline by June 30, 2024 deadline, you can take full advantage of the IDR account adjustment, ensuring your efforts toward loan forgiveness are recognized and credited accordingly. For more information about this program please visit: https://studentaid.gov/announcements-events/idr-account-adjustment