Income-driven plans are a safeguard for people who can’t afford to pay their federal student loans in full over 10 years. Those four plans — IBR, ICR, PAYE, and REPAYE — cap your payments at between 10% and 20% of your discretionary income while extending the repayment term up to 25 years. Plus, they carry a bonus that no other type of repayment plan does: eventual forgiveness of the remaining balance. Read more about income-driven repayment forgiveness.
But for many borrowers, this promise of relief was broken. Student loan servicers failed to record qualifying payments under the plans, a problem brought to light in a recent NPR investigation. The department also found that many servicers had no system to track payments and identify when borrowers qualified for loan forgiveness.
In response to these significant flaws, the White House announced it will use a one-time waiver to credit millions of borrowers with more payments toward loan forgiveness under the income-driven repayment plans.
Using that waiver, the Education Department will count time towards forgiveness for:
monthly payments made under any plan — no matter which payment plan the borrower was in at the time.
12 or more consecutive months of forbearance.
36 or more months of cumulative forbearance.
months spent in deferment before 2013 (except for in-school deferment).
any time borrowers were in repayment before consolidation on consolidated loans.
If the adjustment leads to your loans being immediately forgiven, you’ll get a refund for any payment you made over the forgiveness threshold (20 or 25 years).
If you still have federal loans with Navient, then those are commercially held Federal Family Education Loans. You’ll need to consolidate those loans into a Direct Consolidation Loan before you can receive credit towards the income-driven forgiveness clock. If your loans were already moved to Aidvantage, the department will automatically review your account.
The Education Department will work immediately on the changes, but you may not see them reflected on your account until this fall. It will also display income-driven repayment counts on the Federal Student Aid website later this year.
UP NEXT: Federal Student Loan Forgiveness Programs