One-Time Payment Adjustment
The one-time payment adjustment for all Direct Loans and federally owned Federal Family Education Loans (FFELs) is crucial in helping borrowers struggling with student loan debt. This relief measure was announced by the Education Department in April 2022 and counts certain months towards student loan forgiveness that were previously ineligible under income-driven repayment plans. This one-time payment adjustment helps remedy decades of a broken system due to forbearance steering on behalf of loan servicers, which has caused damage to borrowers who did not track deferments properly or steered to forbearance instead of income-driven repayment plans.
Despite the significance of this adjustment, many borrowers may not be aware of it, particularly with the student loan forgiveness case in front of the Supreme Court taking the limelight. The Education Department must address administrative shortcomings while everyone waits for the Supreme Court ruling, and the One-time adjustment should be a top priority because the servicers under-counted millions of people’s payments.
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According to a published article in Yahoo Finance, the one-time payment adjustment is not contingent on the outcome of the Supreme Court cases heard this week. Borrowers with 240 or 300 months of payments for income-driven repayment forgiveness or 120 months toward Public Service Loan Forgiveness will start seeing their loans forgiven in the spring of 2023. The Education Department has already started making one-time adjustments to borrower accounts, starting with borrowers who are close to reaching 120 months of Public Service Loan Forgiveness.
Overall, the one-time payment adjustment for all Direct Loans and federally-owned Federal Family Education Loans (FFELs) is an essential relief measure for struggling borrowers. The Education Department needs to inform borrowers about the one-time payment adjustment and ensure that loan servicers accurately count millions of people’s payments. It is a lifeline for those struggling with student loan debt, and the Education Department should make sure that every eligible borrower benefits from this relief measure.
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