Delayed Student Loan Forgiveness: Education Department Pushes Back Timeline for IDR Account Adjustment

The Education Department has updated the timeline for student loan forgiveness under a one-time account adjustment. Forbes stated in their article on January 13, 2023 that the Biden administration announced the IDR Account Adjustment as a solution to problems with Income Driven Repayment plans, which allow borrowers to repay federal loans based on income and family size. IDR plans also provide loan forgiveness after 20-25 years.

The IDR Account Adjustment, announced by the Education Department in April, stated that borrowers could start receiving loan forgiveness by fall 2022, and all others should receive retroactive credit by January. However, while PSLF borrowers received credit under the initiative last fall, the Education Department has delayed relief for other borrowers.

The Education Department has pushed back their timeline for student loan forgiveness, now expecting borrowers who meet the 20 or 25-year threshold to see their loans forgiven in Spring 2023. Other borrowers are expected to start receiving their retroactive IDR Account Adjustment credit in Summer 2023. The delays may be due to a lack of funding from Congress.

Borrowers with government-held federal student loans should receive the benefits of the IDR Account Adjustment automatically, while those with FFEL, Perkins, or HEAL Program loans must apply for a Direct Consolidation Loan by May 1, 2023 to get the full benefits. The Biden administration recently announced reforms to REPAYE, but has not given a timeline for implementation. All borrowers should review the Education Department’s guidance, which may be updated without notice.