Loan Consolidation Required–Parachute Credit Counseling Offers FREE Assistance and Counseling
While student loan forgiveness remains on hold for the forseeable future, Income Driven Repayment (IDR) plans are an available opportunity designed to financially assist borrowers and to ultimately reform the student loan system. These plans allow borrowers to make payments on their federal student loans according to a formula based on their income and family size—the payments were deliberately meant to be smaller. Ostensibly this program had been in place but there were major issues in it, resulting in few people actually receiving the proper help.
Last year, IDR Account Adjustment was announced to help student loan borrowers benefit from the program as it was initially intended. The Department of Education will conduct a one-time adjustment of IDR payments to address past inaccuracies and permanently fix IDR payment counting by reforming ED’s IDR tracking procedures going forward.
This past week, the IDR Account Adjustment was extended from May 1, 2023 to December 31, 2023.
The IDR Account Adjustment is further planned to remove the confusion surrounding this program and make it more accessible and available to student loan borrowers.
Other Changes include:
- A retroactive credit toward a borrower’s 20- or 25-year student loan forgiveness term, even if they are not presently in an IDR plan.
- A credit toward Public Service Loan Forgiveness for qualifying borrowers.
- A credit for Parent PLUS borrowers.
There is no application required for the IDR Account Adjustment. Borrowers will automatically receive the benefits.
A critical element, however, is that borrowers with non-Direct and non-government-held federal student loans need to consolidate those loans into the federal Direct consolidation program in order to benefit from the IDR Account Adjustment.
The U.S. Department of Education advises: “Borrowers who have commercially managed FFEL, Perkins, or Health Education Assistance Loan Program loans should apply for a Direct Consolidation Loan by the end of 2023 to get the full benefits of the one-time account adjustment.” Additional info available here: https://studentaid.gov/announcements-events/idr-account-adjustment
Parachute Credit Counseling—formerly known as Consumer Credit Counseling Service of Buffalo (CCCS)—is the only local nonprofit organization with expertise in student loan consolidation. Parachute recently announced that they are now offering free Student Loan Counseling throughout the eight counties of Western New York along with expert strategies for attaining financial stability.