All federal student loans are currently on a payment pause, but if you have been faithfully paying on an income-driven repayment plan, you might be wondering what will happen to your forgiveness options. Fortunately, borrowers still earn credit towards income-driven repayment forgiveness and, if they work for the government or nonprofit organization, Public Service Loan Forgiveness — despite not having to make payments!
The federal student loan system has been on hold since the coronavirus pandemic began due to actions by two presidents and Congress. During this time, millions of borrowers have had no monthly payments, and their interest rates have been set to zero. They also received an additional benefit: credit toward student loan forgiveness.
Each month spent in the student loan payment pause counts towards forgiveness through income-driven repayment plans and as a qualifying payment for the Public Service Loan Forgiveness (PSLF) Program.
Not every federal student loan borrower qualifies for this added benefit. Only those with Ed-owned federal loans are eligible. Borrowers who have commercially held Federal Family Education Loans, Perkins Loans, and private student loans aren’t eligible for the forgiveness credit or the suspended payments.
But — and this is the only exception — people with ineligible FFEL or Perkins Loans can qualify for the forbearance and forgiveness credit by consolidating into a Direct Consolidation Loan. Private student loans can never be consolidated or refinanced with the federal government. That’s true even if you previously refinanced federal student loans with a private lender and now want to change your private loans back into a federal loan.
Related: FFELP Loan Forgiveness