Account Adjustments Bring You Closer to Student Loan Forgiveness
November 7, 2022

The Department of Education recently announced a second chance at student loan forgiveness for many borrowers through one time account adjustments. Read on for more details and instructions about actions you need to take.


What are one time account adjustments?


The Department of Education identified widespread problems related to income-driven repayment and forbearance information provided by servicers. They also recognized poor payment history tracking. These problems are remedied by the one time account adjustment. Most past payments will be counted as if they were made on an income-driven repayment plan. Even late, partial, or payments made on another repayment plan will count.


In order for payments to be counted toward student loan forgiveness, you need to have Direct Loans.


Payments on FFEL, Perkins, and other non-Dept of Ed held loans can be counted if you apply for a Direct Consolidation Loan by 05/01/2023.


Periods of ‘excessive’ forbearance will be counted as payments made, getting you closer to loan forgiveness.


Borrowers with more than 12 months of consecutive forbearance or 36 or more months of total forbearance meet the definition of ‘excessive forbearance’. For example, if you entered a financial hardship forbearance from May 2015-August 2016; you would be credited for the entire 16 month period as if you had made payments.


‘In school deferment’ time doesn’t count toward loan forgiveness.

Your loan status is ‘in school deferment’ when you’re enrolled at least half-time. In school deferment is not a voluntary deferment. So unfortunately, time spent in this status won’t be counted toward any months of excessive forbearance.


Any payments made since 1994 on Direct Loans will be counted as if they were income-driven payments.

Remember you can have past payments counted on FFEL or other non-direct loans (like Perkins) if you apply for a Direct Consolidation loan before 05/01/2023. For all loans that are Direct the Department of Education will automatically process a one time account adjustment starting July 1st, 2023 to treat all past payments as income-driven payments.


If you’ve been paying on your student loans for more than 20 years you may qualify to have your remaining loan balance automatically forgiven. Even if those payments were late or partial. If your loans were in default or bankruptcy that time doesn’t count toward this 20 year total. You don’t need to apply for forgiveness or do anything if you only have Direct Loans. The one time account adjustment and cancellation will happen automatically. Individuals who qualify for forgiveness now will start seeing their balances cancelled as early as this month (November 2022).


What do I need to do for the one time account adjustment?

If you only have Direct Loans for your own education

You don’t need to do anything to have your account adjusted. Any periods of ‘excessive forbearance’ will be counted as income-driven payments starting this month. Your account will be adjusted for payments made under the wrong repayment, or late/partial payments staring July 1, 2023.


If you have FFEL or other non-direct loans (Perkins, Health Education Assistance Loans, etc)

You MUST apply for a Direct Consolidation Loan before 05/01/2023 to have your past payments & periods of excessive forbearance  counted toward student loan forgiveness. At this time, it’s not clear what will happen to the payments on Direct Loans that have been consolidated. We recommend consolidating only ineligible loan types by themselves. Leave your eligible Direct Loans out of the consolidation loan at this time.

*Keep in mind consolidating Perkins loans removes Perkins loan cancellation benefits. Be sure to consider this when making your decision.


If you have Parent PLUS loans

It’s not clear if past payments on Parent PLUS loans will be counted under this one time account adjustment. Parent PLUS loans aren’t specifically called out in the rules. If you are pursuing PSLF, you must consolidate your Parent PLUS loans to make forward progress. Only consolidated Parent PLUS loans can participate in an income-driven repayment plan. Consolidate your Parent PLUS loans by 05/01/2023.  You could get credit for past payments if parent PLUS loans are included in the one time account adjustment.


How does the one time account adjustments impact Public Service Loan Forgiveness?

If you missed the PSLF limited waiver deadline, the one time account adjustment can give you a second chance at student loan forgiveness. You’ll want to consolidate any FFEL (or other non-direct loans) by themselves before 05/01/2023 in order to have any past payments counted. Then you’ll need to submit a PSLF form for any qualifying 501(c)3 non-profit, government, or tribal organization you worked full-time for since 10/01/2007.


There is no deadline to submit the PSLF form. However, if you want to have your PSLF qualifying payment count updated automatically in July, submit your PSLF form(s) 90 days ahead of time (mid April). That way your employment period(s) are approved and ready. Your actions are making sure you have Direct Loans and certify your employment by submitting the PSLF form(s). Be sure to submit PSLF form(s) for all qualifying employment since 10/01/2007. Your payment count will be updated starting July 1, 2023.

Key resources

Department of Education One Time Account Adjustments Information Page

What you need to Know about the Student Debt Relief Plan Announced 8/24

Coach Q&A: How can I track my progress toward Public Service Loan Forgiveness

Preparing for Federal Student Loan Payments to Resume

Department of Education Direct Consolidation Loan Application