The Department of Education recently launched the IDR Waiver, a program enabling federal student loan borrowers to receive credit toward loan forgiveness. If you’ve been repaying your federal student loans for over 20 years, your remaining balance will be automatically forgiven on or after July 1, 2024. For graduate school borrowers or parents of students, the forgiveness period extends to 25 years. Even if you’ve had periods of non-payment, those can still count toward loan forgiveness. This program is expected to aid millions of federal student loan borrowers in clearing their debts.
However, there’s a caveat: If your federal loans are not held by the Department of Education but by a commercial lender, you must consolidate your loans into a Direct Loan to qualify for the IDR Waiver. If your payments were not paused during the COVID payment pause from March 2020 to September 2023, then your student loans are held by a commercial lender, and you must consolidate by the deadline. The deadline for consolidation is April 30, 2024.
Even if your federal student loans are all Direct Loans, there is still a benefit to consolidating if you had significant gaps between your student loans. Some of the situation in which this could happen are: if you went to graduate school several years after completing your undergraduate degree, or if you took a break in your education for several years. If you consolidate your loans in this situation, then your most recent loans get the debt forgiveness benefits of your oldest loans. This can shave years off of your loan repayment.
If you have questions about the IDR Waiver, or want to apply for loan consolidation, please give us a call at (520) 745-4429 in Tucson, or (480) 788-0098 in Mesa and Phoenix, or contact us here.