Forbearance steering is a process where contractors hired by the U.S. Department of Education guided or steered borrowers who struggled to make their monthly payments into long-term forbearances instead of offering an income-driven repayment plan.
Imagine if you were struggling to pay your student loans and you had two choices: put a delay on repaying the debt for a set period of time, or enroll in a payment plan that calculated payment based on your income that would cancel your debt after 20 or more years.
If you were only told about the first choice, you’d be angry, right? This is what happened to hundreds of thousands of borrowers.
This overuse of forbearance robbed borrowers of earning credit for student loan forgiveness programs and inflated their bills by adding thousands of dollars of interest to their loan balances.
On April 19, 2022, the Department of Education acknowledged this long-standing problem and announced it would take immediate action to fix this failure. It also promised to remedy the harm by using a one-time IDR account adjustment.
The department estimates its corrective action will result in immediate debt cancellation for thousands of borrowers in the Public Service Loan Forgiveness Program and others who’ve been repaying for 20 years. These changes will also push another 3.6 million borrowers pursuing debt forgiveness through an IDR plan at least three years closer to relief.
Keep reading to learn more about what will happen with your loans if you qualify for the forbearance steering benefits.