IDR Account Adjustment and Student Loan Consolidation

IDR Account Adjustment and Student Loan Consolidation

Updates to the IDR Account Adjustment

The Biden Administration announced the IDR Account Adjustment in 2022, which was a new Department of Education initiative to perform a one-time reevaluation of all borrower payments made under income-driven repayment plans. Those who have been on IDR plans, but didn’t have all of their student loan payments counted toward IDR Forgiveness, will see their counts go up and could even reach forgiveness if they’ve been in repayment for 25 years. According to

The account adjustment will count time toward IDR forgiveness, including:

  • any months in a repayment status, regardless of the payments made, loan type, or repayment plan;
  • 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance;
  • any months spent in economic hardship or military deferments in 2013 or later;
  • any months spent in any deferment (with the exception of in-school deferment) prior to 2013; and
  • any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a consolidation loan.

The Dept. of Ed. will perform this recount in 2024 and won’t require any application, paperwork, or other input from borrowers; it will take place automatically. The new counts will also affect those pursuing PSLF, and could give them a boost towards forgiveness. The Account Adjustment will only affect those with federally held FFEL and Direct Loans. If you have commercially managed FFEL, Perkins, or Health Education Assistance Loan (HEAL) Program loans, you’ll want to pay special attention to the last bullet point as you  will need to take action to benefit from the adjustment.

Consolidation for the IDR Account Adjustment

Just like last year’s Limited Waiver Opportunity, the IDR Account Adjustment can help to make loan forgiveness a reality for many borrowers, but will first require that they consolidate their existing student loans. If you only have Direct Loans or federally managed FFELs, you don’t need to do anything. If you have commercially managed FFELs, HEALs, or Perkins loans, you have until the end of 2023 to consolidate them into a new Direct Consolidation Loan, which will allow you to take advantage of the recount. Unlike when you normally consolidate —and your payment count is reset to zero—you get to keep the qualifying payments towards forgiveness that you’ve already made. If your loans have different amounts of time in repayment, then consolidating into a new DCL will credit the new loan with the longest amount of time in repayment!

Again, if you only have federally managed FFEL or Direct Loans, you don’t need to do anything to take advantage of the IDR Account Adjustment. If you have other kinds of federal loans and want to know more about what you can do, contact your student loan professional. The deadline has been extended to the end of 2023, but you don’t want to wait before you find out what your best course is. Make sure you know before you consolidate because consolidation is permanent!

If you have Federal Student Loans, schedule your free 15-minute Discovery Session to find out if your loans can be forgiven after 25 years.