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Income-Driven Repayment Plan (IDR), Public Service Loan Forgiveness (PSLF), and Potential Student Loan Debt Relief Opportunities for FFELP Loans and Direct Loan Consolidation

Public Service Loan Forgiveness (PSLF)

If you're employed full-time by a government or non-profit organization, you may be eligible for the PSLF Program, which forgives the remaining balance on your Direct Loans after you've made the equivalent of 120 qualifying monthly payments under an accepted repayment plan.

All federal loans serviced by AES are commercially held FFELP Loans; however, you could benefit if your FFELP Loans serviced by AES are consolidated into a Direct Consolidation Loan. Learn more about the PSLF program

Saving on a Valuable Education (SAVE) Plan

The Saving on a Valuable Education (SAVE) Plan is the newest IDR plan. Like other IDR plans, the SAVE Plan calculates your monthly payment amount based on your income and family size. The SAVE Plan can:

  • Decrease your monthly payments by increasing the income exemption from 150% to 225% of the poverty line.
  • Eliminate 100% of remaining monthly interest for both subsidized and unsubsidized loans after you make a full scheduled payment.
  • Exclude spousal income for borrowers who are married and file taxes separately.

All federal loans serviced by AES are commercially held FFELP Loans; however, you could benefit and enroll in the SAVE plan if your FFELP Loans serviced by AES are consolidated into a Direct Consolidation Loan. Learn more about the SAVE plan.

Limited IDR Account Adjustments

On October 25, 2022, ED announced that they will perform one-time account adjustments to credit certain periods of deferment, forbearance, and periods of repayment status. The Department of Education (ED) currently expects that the payment count adjustment will be completed by July 1, 2024.

ED advised that submitting a consolidation application alone does not guarantee any benefits under the payment count adjustment. In general, it takes at least 60 days to process a Direct Consolidation Loan application and to disburse the new loan. This means that if you wanted to consolidate your loans to get the benefit of the adjustment, you should have submitted a loan consolidation application by April 30, 2024. Learn more about the Limited IDR One-Time Account Adjustments.

ED announced that all qualifying periods for the IDR one-time adjustment will also be counted towards PSLF forgiveness where the borrower certifies qualifying employment during those periods.

Direct Loan Consolidation

Direct Loan Consolidation can qualify you for PSLF, give you access to different repayment options, including the new SAVE plan, help you get out of default, combine your loans into a single payment, or change the interest rate on your loan.

However, if you consolidate your federal loans you could give up other benefits, such as:

  • Longer Repayment Period: If you choose to repay your new consolidation loan on the Standard or Graduated plan, consolidation can increase the period you have to repay your loan, resulting in more payments and more interest overall than you would have if you didn't consolidate.
  • More Interest: When you consolidate your loans, any outstanding interest on the loans you consolidate becomes part of the original principal balance on your consolidation loan, which means that interest may accrue on a higher principal balance than if you had not consolidated.
  • Loss of Certain Borrower Benefits: If you consolidate loans other than Direct Loans, you may lose certain borrower benefits—such as interest rate discounts, principal rebates, or some loan cancellation benefits—associated with your current loans.

Learn more about Direct Loan Consolidation

Student Loan Debt Relief

President Biden announced new plans to cancel student debt under the Higher Education Act. If implemented as proposed,

For FFELP loans held by a private education loan holder or a guaranty agency, ED proposes to waive the outstanding balance of a FFELP loan when:

  • A loan first entered into repayment on or before July 1, 2000
  • The borrower is otherwise eligible for, but has not successfully applied for, a closed school discharge
  • The borrower attended an institution that lost its Title IV eligibility due to a high cohort default rate (CDR), if the borrower was included in the cohort whose debt was used to calculate the CDR or rates that were the basis for the institution's loss of eligibility

For Direct Loans, the proposed plan would:

  • Cancel up to $20,000 in interest for all borrowers who have accrued or capitalized interest on their loans since entering repayment
  • Automatically cancel debt for borrowers who would otherwise be eligible for loan forgiveness under IDR plans, like the SAVE Plan, or PSLF, but are not enrolled in those programs
  • Cancel student debt for borrowers with undergraduate loans who entered repayment at least 20 years ago and debt for graduate school borrowers who entered repayment at least 25 years ago
  • Cancel student debt for borrowers who previously enrolled in low-financial-value progra

All federal loans serviced by AES are commercially held FFELP Loans; however, you could benefit further if your FFELP Loans serviced by AES are consolidated into a Direct Consolidation Loan.

For up to date information about the Student Loan Debt Relief proposal and to get answers to Frequently Asked Questions please visit StudentAid.gov.