With the future of student loan forgiveness still hangs in the balance, borrowers can plan for the worst-case scenario. This would include resuming student loan repayments at the end of August, at the latest, as previously reported by GOBankingRates.
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But there is another tactic that could help some borrowers eliminate their debt. In 2022, the Department of Education announced a one-time payment adjustment that will count certain months toward student loan forgiveness for borrowers with an income-contingent repayment (IDR) plan.
“Student loans were never meant to be a life sentence, but it certainly is for borrowers excluded from the debt relief they are eligible for,” the US Secretary of State said. ‘Education, Miguel Cardona, in an archived press release.
Some loan servicers, the ministry reported, had imposed forbearance on borrowers when their monthly payment could have been $0 under an IDR. These borrowers did not progress to canceling IDR (or canceling utility loans) while the loans were in forbearance.
But, once the department fixes that, some borrowers could come out of the summer with no remaining student loan debt. “All months in which borrowers have made payments will count towards IDR, regardless of the repayment plan,” according to the Ministry of Education’s press release.
Borrowers on most IDR plans receive a rebate after 20 years of payments.
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If that sounds like you, contact your student loan officer to see where you stand after this one-time payment adjustment. Regardless of whether or not the Supreme Court allows Biden’s student loan forgiveness plan, you could find yourself one step closer to being free of student debt.
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