According to a report by CNBC on Wednesday, October 15, student loan borrowers have switched their repayment plans from Income-Driven Repayment (IDR) to Income-Based Repayment (IBR). However, due to President Trump’s “Big and Beautiful Act” gradually phasing out various existing IDR plans, IDR plans may no longer offer debt forgiveness, causing these borrowers’ loans to potentially not be fully discharged.
The Trump administration recently announced that it will resume processing IBR loan plans, and student loans for eligible borrowers will be forgiven.
The IDR plan was first created by Congress in the 1990s to alleviate the repayment burden of student loan borrowers. These plans traditionally limit the monthly payments to a specific percentage of disposable income and forgive the remaining debt after a certain period, usually 20 or 25 years.
To qualify for IBR forgiveness, borrowers must complete a 20 or 25-year repayment period based on the loan term and make up to 300 qualifying payments during that time.
Under the IBR plan implemented in 2009, borrowers who completed 240 payments after July 1, 2014, could have their debt forgiven. If the loan date was before this time, borrowers had to complete 300 payments for the Department of Education to reset the remaining balance.
Higher education expert Mark Kantrowitz advises that if borrowers have met the forgiveness qualifications but have not received notification, they should continue making timely payments to “avoid being marked as in default.”
He also stated that even if borrowers have switched repayment plans over the years, some repayment records from other plans may count towards IBR forgiveness eligibility. As long as the payment is made under IDR, once transferred to IBR, the payment duration should be counted towards the forgiveness timeline.
(The article referenced CNBC’s report)