The Education Department promises debt forgiveness to every federal student loan borrower after at least two decades of payments. To qualify, borrowers must enroll in one of the department’s income-driven repayment plans and make their student loan payments on time and for the full amount due.
Parent PLUS Loans are eligible for IDR Forgiveness, but only after they’ve been consolidated into a Direct Consolidation Loan. This extra step is needed because parent loans aren’t eligible for income-driven repayment until they’re consolidated into a Direct Loan. Once that happens, the new loan can be repaid under the Income-Contingent Repayment Plan. Read more about repayment options for Parent PLUS Loans.
Related: How to Consolidate Parent PLUS Loans
But what if you’ve never consolidated and switched to the ICR plan? Normally, you’d have to pay for 20 more years before you could have your remaining balance written off. But earlier this year, the Education Department announced that for a limited time, it would allow borrowers to consolidate and get credit for every payment they’ve made since taking out the loan. The IDR Account Adjustment will also give borrowers credit toward forgiveness for some of the time their accounts were in forbearance — like during the payment pause — or deferment.
The White House estimates that the IDR Waiver will immediately wipe out the debts of hundreds of thousands of borrowers and push millions more to the brink of forgiveness.
You don’t need to apply for this benefit if the Education Department holds your loans. The department will automatically review your account and update StudentAid.gov with your progress toward forgiveness.
But if a guaranty agency holds your federal student loans, you’ll need to consolidate those loans into a Direct Loan by July 1, 2023. Note: Your federal loans are with a guaranty agency if you had to keep paying your federal loans throughout the pandemic.
Tax liability: If your loans are forgiven anytime before 2026, the forgiven amount will be tax-free as part of the American Rescue Plan.
Learn More: Are Consolidation Loans Eligible for Loan Forgiveness?