Based on my reading, even if the Supreme Court rules against the $10k/$20k borrower payments, several other Biden policies are designed to assist student loan borrowers. One policy indicates that federal loans could be forgiven or waived after 20 years of payment, even if not under an income-driven plan. Additionally, deferments and COVID-related pause periods count towards these 20 years.
Here’s my question: I still have a small amount left on a federally consolidated loan, which started in August 2004 and was not under an income-driven plan. If I resume payments in October this year and continue until August next year, would the remaining balance at that time be forgiven, waived, or dismissed under this 20-year rule? Am I understanding this correctly?
Does it matter whether the loans were originally disbursed or when I consolidated them and started repayment? Because if it’s based on when the loans were disbursed to my school, I would reach the 20-year mark before resuming payments in October. Would that mean they are forgiven, and I wouldn’t owe anything technically?
I would appreciate any guidance to confirm or correct my understanding.
The 20-year forgiveness rule applies to federal student loans under income-driven repayment (IDR) plans. It forgives any remaining balance after 240 qualifying monthly payments (20 years x 12 months).
Your Situation:
Your loan is federally consolidated, which qualifies.
However, it wasn’t previously under an IDR plan. Payments made under the standard 10-year plan or during deferment/forbearance generally don’t count towards the 20-year forgiveness.
Key Points:
Focus on IDR Plan: To qualify for forgiveness under the 20-year rule, you’ll need to switch to an IDR plan and resume payments. This will ensure your payments count towards forgiveness.
Disbursement vs. Consolidation Date: The original disbursement date of your loans matters more than the consolidation date.
Reaching 20 Years Before Resuming Payments: If your original disbursement date was in August 2004, you might already be past the 20-year mark by October 2024. In this case, the remaining balance could be eligible for forgiveness, depending on your specific repayment history.
Recommendations:
Contact Your Loan Servicer: They can provide the most accurate information about your specific loan details, repayment history, and potential eligibility for forgiveness under the 20-year rule.
Explore IDR Options: If you haven’t already, research IDR plans and choose one that best fits your income. Starting payments under an IDR plan now will ensure you make qualifying payments towards forgiveness.