A federal court issued an injunction preventing the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) Plan and parts of other income-driven repayment (IDR) plans. As a result, the IDR and online loan consolidation applications are temporarily unavailable. Borrowers can still submit a paper loan consolidation application.
Payment Count Adjustments Toward Income-Driven Repayment and Public Service Loan Forgiveness Programs
More than 3.6 million William D. Ford Federal Direct Loan (Direct Loan) Program borrowers will receive at least three years of credit toward loan forgiveness, and many will see their loans forgiven automatically.
FAST FACTS
Q: Why is this happening?
- A: This adjustment is intended to more accurately reflect borrowers’ payment counts.
Q: When will it be done?
- A: The adjustment is currently underway and will continue through summer 2024.
Q: Who is doing the recount?
- A: The U.S. Department of Education is conducting this payment count adjustment.
The U.S. Department of Education (ED) currently expects that the payment count adjustment will be completed by Sept. 1, 2024. When we implement the adjustment, it will automatically be applied to all Direct Loans and FFEL Program loans that are managed by ED at that time. This includes Direct Consolidation Loans that repaid a privately held Perkins or FFEL Program loan and that are disbursed before the adjustment occurs.
Please note that submitting a consolidation application alone does not guarantee any benefits under the payment count adjustment. In general, it takes at least 60 days to process a Direct Consolidation Loan application and to disburse the new loan. This means that if you want to consolidate your loan(s) in order to get the benefit of the adjustment, you should submit a loan consolidation application by June 30, 2024.
Who This Is For
This information applies to you if you are
on an income-driven repayment (IDR) plan or were on one in the past;
in the Public Service Loan Forgiveness (PSLF) program; or
not on an IDR plan but are interested and have Direct or Federal Family Education Loan (FFEL) Program loans held by the U.S. Department of Education (ED).
If you aren’t on an IDR plan but want to reduce your monthly payment, find out if you’re eligible for an IDR plan.
If none of the above statements match your situation, review the Q&As below to see if you have other options.
About the Improvements
If you’re on an IDR plan or working toward PSLF, your remaining loan balance gets forgiven after you make the required number of payments (the amount of time depends on your plan, see below).
In the past, there were a variety of reasons why some months may not have been credited toward loan forgiveness—for example, months when you were in a payment plan that wasn’t eligible.
With this payment count adjustment, we will change whether certain payments or months are credited toward your loan forgiveness. Depending on the status of your loan repayment, this change will result in one of the following for eligible borrowers:
You still have more time left until the end of your repayment period. You will be closer to the end of your repayment period and closer to forgiveness. Find your repayment plan options.
You reach the end of your repayment period. You will automatically receive loan forgiveness.
You have more than the number of months required in your repayment period. In most cases, you’ll receive a refund for any overpayment. Learn about refunds.
How It Works
We will review every borrower account that has at least one Direct Loan or one FFEL Program loan held by ED. We will identify all payments to be counted and instruct your servicer to make the update to your account.
- We have begun to review loans that have been in repayment long enough to qualify for IDR forgiveness (borrowers who have been in repayment for 20 or 25 years). We will then reevaluate your account every other month to determine if additional borrowers will qualify for forgiveness.
- Next, we will review borrowers with at least one approved PSLF form to update the months that could qualify for PSLF only. These borrowers will see their PSLF payment counts update each month until we make the final adjustment to their IDR counts in 2024.
- Finally, we will review all eligible loans to update the months that qualify for IDR forgiveness.
If this review results in you being eligible for IDR forgiveness, we will contact you and give you the chance to opt out of receiving the forgiveness.
Borrowers leaving default through Fresh Start, assignment from a guaranty agency, or loan rehabilitation will receive the payment count adjustment treatment at that point even if that occurs after the adjustment is applied to other borrowers.
Payment Count Adjustment for Eligible Borrowers
ED will conduct an adjustment of IDR-qualifying payments for all William D. Ford Federal Direct Loan (Direct Loan) Program and federally owned Federal Family Education Loan (FFEL) Program loans.
The payment count adjustment will count time toward IDR forgiveness, including
any months in a repayment status, regardless of the payments made, loan type, or repayment plan;
12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance;
any months spent in economic hardship or military deferments in 2013 or later;
any months spent in any deferment (with the exception of in-school deferment) prior to 2013; and
any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a consolidation loan.
Generally, repayment status includes any periods where the borrower was enrolled in a repayment plan. Repayment status does not include periods in forbearance, deferment, bankruptcy, or default. However, certain periods of forbearance, deferment, or default will count toward forgiveness in the circumstances described above.
Any borrowers with loans that have accumulated eligible time in repayment of at least 20 or 25 years will see automatic forgiveness, even if they are not currently on an IDR plan.
Borrowers will continue to see the COVID-19 related forbearances counted toward IDR and PSLF forgiveness.
We encourage borrowers who have commercially managed FFEL, Perkins, or Health Education Assistance Loan (HEAL) Program loans to apply for a Direct Consolidation Loan by June 30, 2024, to get the full benefits of the payment count adjustment.
In most cases if borrowers made qualifying payments that exceed the applicable forgiveness period (20 or 25 years), they will receive a refund for their overpayment.
Borrowers with loans in default can benefit by getting out of default—including through the Fresh Start initiative. Borrowers who exit default prior to the end of the Fresh Start period will receive the full benefit of the payment count adjustment and receive credit for periods in default from March 2020 through the month they exit default. After the Fresh Start period, only borrowers who rehabilitate to leave default will benefit from the adjustment, but they will not receive credit for periods in default during the payment pause.
Effects on Public Service Loan Forgiveness (PSLF) Applicants
Borrowers with at least one approved PSLF form will begin to see their PSLF counts adjusted in Fall 2023.
Borrowers who consolidate will have their PSLF counts temporarily reset to zero, and these counts will begin adjusting in Fall 2023.
PSLF counts will continue to be adjusted each month until the IDR counts for all federally held FFELP and Direct Loans are adjusted in 2024.
After the adjustment in 2024, all periods credited toward IDR will also be credited toward PSLF for eligible loans and periods where the borrower certifies public service employment.
If you’ve applied or will apply for PSLF and certify your employment, you may see the benefits of this adjustment to your qualifying payment count.
These changes will be applied automatically, to all PSLF-eligible Direct Loans, including consolidated and unconsolidated parent PLUS loans.
If you believe you might benefit, use the PSLF Help Tool to certify periods of employment and track your progress toward forgiveness.
If you’ve made a complaint to your servicer and it has not been resolved to your satisfaction, you can submit a complaint to us.
Questions & Answers
The payment count adjustment will be applied to all Direct Loans and all FFEL Program loans held by ED.
Do you want to pursue PSLF but have FFEL Program loans held by ED? Only Direct Loans are eligible for PSLF, so you must consolidate your FFEL Program loans into the Direct Loan program before the adjustment to get PSLF credit.
If you had FFEL Program loans not held by ED and you went into default during the COVID-19 payment pause, your loans will be reassigned to ED. These loans will receive IDR credit under the adjustment when that assignment occurs. But if you want PSLF credit, you must consolidate your FFEL Program loans before the adjustment occurs, as mentioned above.
Loans are eligible for forgiveness based on the following timeframes:
Loan Type
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Eligible After…
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PLUS Loans for parents (or consolidation loans that included a PLUS Loan for parents)
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25 years (300 months) of payments
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Borrowers with only undergraduate loans
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20 years (240 months) of payments
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Borrowers with graduate loans AND currently enrolled in the Pay As You Earn (PAYE) repayment plan
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20 years (240 months) of payments
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Borrowers with graduate loans and NOT currently enrolled in the PAYE repayment plan
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25 years (300 months) of payments
|
It depends on whether you reach your forgiveness milestone before or after September 2023.
If you reach your forgiveness milestone:
Before Sept. 1, 2023
We expect to discharge your loans before student loan payments restart.
On or After Sept. 1, 2023
You will likely have to start making payments after the payment pause ends. But don’t worry—you’ll get a refund for any payments beyond the number you need for forgiveness.
You can also choose to enter forbearance until your forgiveness is processed. But if you enter forbearance and do not yet reach 20 or 25 years’ worth of payments, you won’t get credit for the period of forbearance and will need to make additional eligible payments to reach forgiveness.
Student loan interest will resume in September 2023. Your first payment will be due in October 2023. You’ll get your bill in September or October—at least 21 days before your payment due date—with your payment amount and due date included.
You don’t need to be enrolled in an IDR plan to benefit from the adjustment. You can still estimate your payments and apply for an IDR plan so that you will be on a more affordable plan when payments resume. If you don’t reach the forgiveness milestones with the adjustment, you will need to enroll in an eligible plan after payment resumes to continue accruing credit toward forgiveness.
We are taking steps to address longstanding issues with the lack of information given to borrowers about the possible benefits of IDR for them. This includes conducting a payment count adjustment that counts all prior periods of repayment toward IDR forgiveness, regardless of your repayment plan. When the adjustment is complete, you will need to enroll in an eligible repayment plan in order to continue accruing credit toward forgiveness.
No. Payments identified under the payment count adjustment will bring you closer to forgiveness and become part of your ongoing IDR and PSLF payment counts. They don’t expire or disappear.
However, if you consolidate after this adjustment, it could affect your total months of repayment eligible for IDR or PSLF depending on the types of loans paid off by the consolidation. Learn about loan consolidation.
The payment count adjustment will credit payments or periods in repayment, deferment, or forbearance toward IDR and PSLF forgiveness including
any months in a repayment status, regardless of the payments made, loan type, or repayment plan;
12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance;
any months spent in economic hardship or military deferments in 2013 or later;
any months spent in any deferment (with the exception of in-school deferment) prior to 2013; and
any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a consolidation loan.
The adjustment will credit periods back to the start of the IDR program, July 1, 1994, as eligible toward IDR forgiveness. Periods before July 1, 1994, will only be used to determine whether you meet the 12- or 36-month forbearance threshold.
You will also get credit toward PSLF for any month during or after October 2007 that you had qualifying employment and were in a repayment status, regardless of the payments made, loan type, or repayment plan.
Finally, time in default is not normally counted toward IDR or PSLF. However, borrowers who exit default during the Fresh Start period will receive credit from March 2020 through the date that they leave default. After the Fresh Start period, only borrowers who rehabilitate to leave default will benefit from the adjustment.
Generally, repayment status includes any periods where the borrower was enrolled in a repayment plan. Repayment status does not include periods in forbearance, deferment, or default. However, those periods will count toward forgiveness in the circumstances described in this policy.
To find this information, you can request your account history from your servicer. This history will include descriptions of the specific forbearance or deferment periods for most accounts.
Normally, time in forbearance does not count as time in repayment. But under the payment count adjustment, time in forbearance will count toward IDR and PSLF under these specific conditions:
Borrowers with 12 or more consecutive months in forbearance (excluding the COVID-19 payment pause) will have those consecutive months treated as time in repayment.
Borrowers with 36 or more cumulative months in forbearance (excluding the COVID-19 payment pause) will have all of their time in forbearance treated as time in repayment.
These adjustments apply only to loans that are eligible for consideration under the payment count adjustment. Additionally, only months in forbearance that occur after July 1, 1994, will be credited for IDR and after Oct. 1, 2007, for PSLF. Periods before July 1994 will only be used to determine whether you meet the 12- or 36-month forbearance thresholds.
All borrowers with time in the COVID-19 payment pause forbearance will have that time treated as time in repayment. Any time in forbearance effective after the end of the COVID-19 payment pause but before we make the payment count adjustment in 2024 will contribute to a borrower’s 12- or 36-month forbearance thresholds.
Time spent in bankruptcy is not eligible to be treated as time in forbearance or repayment.
Borrowers with other amounts of time in forbearance can submit a complaint to us after we make the payment count adjustment to have their time in forbearance reviewed to determine if they were steered into unnecessary forbearances, which could result in those months being credited toward IDR and PSLF.
Normally, time in deferment does not count as time in repayment. But under the payment count adjustment, time in deferment will count toward IDR and PSLF under these specific conditions:
Prior to 2013, time spent in any deferment, except in-school deferment, will be treated as time in repayment.
Time spent in specific military-related deferments in 2013 or later will be treated as time in repayment.
Time spent in economic hardship deferment in 2013 or later will be treated as time in repayment.
These adjustments apply only to loans that are eligible for consideration under the payment count adjustment. Additionally, only months in deferment that occur on or after July 1, 1994, will be credited for IDR and after Oct. 1, 2007, for PSLF.
As part of the new Saving on a Valuable Education (SAVE) Repayment Plan rules, we will allow other prior and future periods of deferment to count toward IDR forgiveness and PSLF. We will be evaluating how we can include those deferments into the payment count adjustment in the future.
Generally no. A grace period is the period before the borrower starts repayment and is usually six months long.
In some cases, prior servicers reported grace periods that were longer than the loan program terms allowed for. In these cases, we will treat those extra months of the grace period as time in repayment.
No. Time spent in either an in-school status or an in-school deferment does not count as time in repayment.
We will evaluate your loan history starting on July 1, 1994. For a loan disbursed in 1994 to be considered for this payment count adjustment, the loan must be still owed by the same borrower or included in a consolidation loan that is owed by the same borrower.
Assuming your repayment history overlaps for each loan, the consolidation loan will be credited with the longest amount of time in repayment of the loans that were consolidated. For example, say you had 50 months of time in repayment on one Subsidized Stafford Loan and 100 months of time in repayment on another Subsidized Stafford Loan. If you consolidated those loans, you would receive credit for 100 months of payments on the new Direct Consolidation Loan.
If your repayment history does not overlap for each loan, the consolidation loan may be credited with more time in repayment than the loan with the longest amount of time in repayment. Using the same example above, if the loan with 50 months of time in repayment included January 2017 in repayment status but the loan with 100 months did not, the resulting consolidation loan might be credited with 101 months of payments. This can occur where borrowers relied on different repayment, forbearance, or deferment options on different loans for the same period.
We will start processing loans that are eligible for forgiveness later this year. If you have loans with different counts and one of those loans qualifies for forgiveness, you may benefit from consolidating in order to get all of your loans forgiven at the same time. If you do, you will receive forgiveness because the consolidation loan will be credited with the longest amount of time in repayment.
If you’ve been notified that one of your loans will be forgiven and you don’t want that loan to be included in the consolidation loan, then no extra steps are required from you. That loan will be forgiven and removed from the consolidation request.
If you have submitted a consolidation application and have been notified that a loan is eligible for forgiveness, and you do want that loan that has been identified for forgiveness to be included in your consolidation loan, you must request an opt-out with your servicer. The opt-out is specific to each individual loan, so you should not request to opt back in after the consolidation loan has been disbursed. After the consolidation loan has been disbursed, it will be evaluated for forgiveness during a later two-month cycle. (We will evaluate loans for forgiveness every two months.)
Consolidating a loan that has already been identified for forgiveness with other loans that are not eligible for forgiveness could
impact which IDR plans the consolidation loan can be enrolled in if the loan not forgiven.
We encourage you to apply for a consolidation loan by June 30, 2024, in order to be considered for the payment count adjustment.
Not right now. If you apply for consolidation by June 30, 2024, the adjustment will count periods of repayment on your loans prior to the consolidation toward IDR forgiveness and (for eligible borrowers) PSLF.
This differs from the earlier approach, in which consolidating your Direct Loans would reset your payment count to zero. After the adjustment has been applied to all borrower accounts in 2024, accounts will be treated in accordance with the regulations in place at that time.
If you recently consolidated your loans, your count of eligible and qualifying payments for both IDR and PSLF will temporarily reset to zero, but we will continue to forgive accounts that reach the IDR forgiveness milestones. But don’t worry—if you don’t reach forgiveness when you consolidate, we will update your account to show the full payments credited under the adjustment in 2024.
No. Refunds only apply for payments (in excess of 20 or 25 years’ worth of payments) that were paid on the loan that is forgiven. Payments made on a loan that is included in a consolidation loan can’t be refunded.
The adjustment will be applied to most borrowers’ accounts in 2024. It will be applied only to Direct and FFEL Program loans held by ED. If you have commercially held FFEL or any Perkins or HEAL loans, we encourage you to consolidate them by June 30, 2024, to benefit from the payment count adjustment.
If you are a PSLF borrower who receives the adjustment in Fall 2023 (or you received an adjustment under the limited PSLF wavier) and you then consolidate later, your new consolidation loan will receive the payment count adjustment as long as you apply for the new consolidation loan by June 30, 2024.
You may or may not want to consolidate, depending on how long your oldest loan has been in repayment.
If your oldest loan is at or near 25 years of repayment as determined by the adjustment calculations, then consolidating all your loans together may be the best option. Parent PLUS borrowers who consolidate those loans with their non-PLUS student loans will be credited based on the time in repayment for all their loans. This ensures borrowers receive the maximum possible credit toward IDR forgiveness under the program.
However, if your consolidation loan will require additional payments before reaching 25 years, you should consider your options about which loans to consolidate carefully. Consolidation loans that repaid a parent PLUS loan are only eligible for one IDR plan: the Income-Contingent Repayment (ICR) Plan. For many borrowers, the ICR Plan will have a significantly higher monthly payment than other, more affordable repayment plans that are available for non-parent PLUS loans. If you consolidate a parent PLUS loan with one or more non-parent PLUS loans, the new consolidation loan will no longer be eligible for those more affordable plans.
Use Loan Simulator to estimate payments under different repayment plans so you can weigh your options.
You can reconsolidate a single existing FFEL Consolidation, but only if you’re in one of these situations:
You’re in default or your loan is delinquent and has been referred for default aversion, and you agree to repay your new Direct Consolidation Loan under an IDR plan.
You’re consolidating in order to qualify for the PSLF Program.
You’re consolidating to use the “no accrual of interest benefit” for active-duty service members, which states that you’re not required to pay the interest that accrues during periods of qualifying active duty military service (for up to 60 months) on the portion of a Direct Consolidation Loan that repaid a Direct Loan Program or FFEL Program loan first disbursed on or after Oct. 1, 2008.
No. In January 2023, we added certain eligible forbearances and deferments for PSLF waiver-eligible borrowers. Additionally, all PSLF borrowers with an approved PSLF form will begin to see the payment count adjustment applied to their PSLF counts in Fall 2023.
If you consolidate at any time after January 2023 and before June 30, 2024, you will receive credit for the same periods of PSLF for which you currently have credit. If you reach the 240 or 300 required payments for IDR forgiveness before the final adjustment occurs, we will discharge your loan at that time.
If this change results in you going over the number of months required for your repayment period, you automatically qualify for forgiveness. You will receive a notice that includes an opportunity to opt out of the automatic forgiveness.
The additional payments made on forgiven loans will be refunded back to one of these dates, whichever is most recent:
The date you reached the required number of payments
The date when ED acquired your loan
In the case of consolidation loans, the disbursement date
You’ll be notified by your servicer when your loans are forgiven. You’ll get any refunds through the same method you originally used to make your payments (for example, by electronic payment or check). Refund processing time is typically two months or less, although it can vary.
To get credit for time in repayment on Perkins Loans or on FFEL Program loans not held by ED, you must consolidate them into a Direct Consolidation Loan. Just keep in mind that you can’t get refunds for payments you made before you consolidated, even though you can get forgiveness credit for those payments.
No. If you have already received forgiveness or paid off your loans, you are not eligible for a refund of prior payments.
The new adjustments will only be applied to Direct and FFEL Program loans held by ED. If you have FFEL loans that are not held by ED, we encourage you to apply for consolidation by June 30, 2024, in order to benefit from the adjustment.
Commercially held FFEL Program loans that defaulted at some point between March 13, 2020, and the end of the payment pause in 2023 will be assigned to ED and placed into current repayment. These loans will receive IDR credit under the adjustment when that assignment occurs. However, since only Direct loans are eligible for PSLF, the borrowers must consolidate their FFEL loans into a Direct Loan before the adjustment to receive PSLF credit.
We will provide the same payment count adjustment treatment to any borrower who eventually splits a joint consolidation loan by consolidating into a Direct Consolidation Loan, even if such split occurs after the date of the payment count adjustment in 2024. Learn how to separate a joint consolidation loan.
Yes, but how you benefit depends on a few factors.
Your loans will automatically be forgiven if
your defaulted loans are held by ED and
you’ve made 240 or 300 eligible payments on your loans, not counting the time your loans were in default.
If you don’t fall into the above group, you might still benefit from the payment count adjustment by getting out of default—including through the Fresh Start initiative. The table below details the benefits you will receive from the payment count adjustment, depending on when and how you exit default.
Timing
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How You Get Out of Default
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Result
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By June 30, 2024
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Fresh Start or apply for a consolidation
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- Get payment credits for eligible months from before going into default.
- Get payment credits from March 2020 through when you got out of default.
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By end of Fresh Start (1 year after payment pause ends)
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Fresh Start or apply for a consolidation
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- Get payment credits for eligible months from before going into default.
- Get payment credits from March 2020 through when you got out of default.
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Any time
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Rehabilitation
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Get payment credits for eligible months from before going into default and for the year after the COVID-19 payment pause ends.
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Commercial FFEL loans that entered default during the COVID-19 emergency are assigned to ED and removed from default. These loans will receive IDR credit under the adjustment when that assignment occurs. However, since only Direct Loans are eligible for PSLF, the borrowers must consolidate their FFEL loans into the Direct Loan before the adjustment to receive PSLF credit under the adjustment.
Typically, Direct PLUS Loans for parents are not eligible for an IDR plan unless they are consolidated.
We will forgive all parent PLUS loans (consolidated or not) that have accumulated 25 years’ worth (300 months) or more of time in repayment. We will also provide PSLF credit to parent PLUS borrowers for the months considered eligible under the adjustment during which the borrower was employed by a qualifying employer.
But what if you have a parent PLUS loan and don’t have 25 years’ worth of time in repayment for IDR or 10 years of eligible PSLF payments? In this case, you’d need to
keep making payments under an Income-Contingent Repayment (ICR) Plan after consolidating to continue making progress toward forgiveness.
Unconsolidated HEAL loans are not eligible for IDR and therefore can’t benefit from the payment count adjustment. A consolidation loan that includes a HEAL loan will benefit from the adjustment; however, periods of payment on the underlying HEAL loan won’t contribute to the overall number of eligible payments you receive. Those consolidation loans will receive credit for any time in repayment on the underlying Direct, FFELP, and Perkins loans.
You won’t get taxed by the federal government, but your state government might tax you. Any debt forgiven as a result of the payment count adjustment won’t create a federal tax liability for you. The American Rescue Plan Act included a provision temporarily modifying the tax treatment of discharged student loan debt. Specifically, the law excludes from gross income qualifying student loans that are discharged between Dec. 31, 2020, and Jan. 1, 2026. During this period, the amounts of forgiven student loan debt won’t be subject to federal taxation.
However, the amount forgiven could be taxable in some states. We will notify you if we plan on discharging your loans as a result of the payment count adjustment and will provide a 30-day period to opt-out of automatic forgiveness.
We are working with your loan servicer to update payment counts in 2024. Your servicer will contact you when your payment count has been updated. Once your payment count is updated, if you think there is an error, visit your servicer’s website to ask about it. You can also submit a complaint to us.
We are issuing new guidance to student loan servicers to ensure accurate and uniform payment counting practices.
We will track payment counts in our modernized data systems and plan to display counts on StudentAid.gov so you can track your progress.