(NerdWallet) – The Department of Education is reconsidering what counts toward income-driven repayment forgiveness.

Starting in November 2022, borrowers who have been paying their federal student loans for 20 years or longer can expect to see the remainder of their debt discharged, while millions more will move significantly closer to forgiveness.

Income-driven plans offer reduced payments over 20 or 25 years, then forgiveness of the remaining balance. IDR was created in the 1990s to protect borrowers from financial hardship; payments are based on the borrower’s income, not the balance owed.

These changes are the result of a new IDR waiver, announced by the Biden administration in April 2022, that bends the rules on which payments count. Now, every month you ever spent in student loan repayment or on pause since leaving school will count toward forgiveness — for one time only.

About 40,000 borrowers with older loans will see balances wiped clean in November, the Department of Education estimates, and more than 3.6 million borrowers are expected to receive at least three years of additional credit toward IDR forgiveness. The consensus among student loan experts is that the impact of the recount could be even greater than that.

Who will see their loans discharged entirely?

The most immediate impact will be felt by thousands of borrowers with the oldest loans — those who have spent at least 240 months in repayment — who will see their debts wiped clean.

Forgiveness through older income-driven repayment plans is notoriously tricky: As of March 2021, only 32 borrowers had ever seen their debt forgiven despite decades of payments, according to a study from the National Consumer Law Center and the Student Borrower Protection Center.

The one-time fixes will roll out beginning in November, addressing the oldest loans, but they are expected to cover all federal loans beginning in July 2023.

“What this is doing is giving people credit for every year they’ve been in repayment regardless whether payments were based on their income or not,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors.

Do I have to do anything?

The recount should be automatic. But certain borrowers may still have to act:

FFELP borrowers with commercially-held loans must consolidate. To benefit from the recount, borrowers must have direct loans. That means borrowers with commercially-held loans must consolidate by Oct. 31, 2022, if possible, and no later than May 1, 2023, to be included, according to James Kvaal, the under-secretary of higher education for the Education Department.

Public Service Loan Forgiveness-seeking borrowers must apply for PSLF. Borrowers who work in public service and who have not already applied by Oct. 31, 2022, must submit an employment certification form and PSLF application no later than May 1, 2023, in order to see the adjustment count toward PSLF. If they have payments remaining after the review, they’ll need to enroll in an IDR plan.

Some borrowers may need to enroll in income-driven repayment. Federal borrowers whose debts are not wiped clean in November will see their past payments reviewed in July. If they are already enrolled in IDR, the number of payments that count toward forgiveness will be adjusted. But if they are not, they face a decision on whether or not to enroll in IDR and take advantage of the recount. Payments they make after next July won’t count if they don’t enroll.

“If they’re not going on an IDR plan, then they’re not going to accrue IDR payments,” says Mayotte. “Forgiveness isn’t the goal; the goal is to pay the least amount over time. For some people, paying their balance off aggressively is going to cost them less rather than continuing to pursue an income-driven plan. Borrowers need to do the math on that.”

Why are payments being recounted?

The new IDR waiver was spurred by acknowledgement from the Education Department that millions of borrowers were improperly steered by their loan servicers into forbearance, which pauses payments but allows interest to rack up. Many others made payments that weren’t counted for technical reasons.

A yearlong waiver of some payment-counting rules for Public Service Loan Forgiveness, which erases loan balances after 10 years of reduced payments by those in public service jobs, so far has benefitted more than 236,000 borrowers, says Education Secretary Miguel Cardona.

The PSLF waiver ends Oct. 31, 2022, but the IDR payment review is similar in nature and it effectively will result in automatic debt cancellation for borrowers who were eligible for, but didn’t take advantage of, that PSLF waiver.

It also moves the needle for borrowers who aren’t in public service jobs but use IDR plans to qualify for forgiveness after 20 or 25 years. Most will not qualify for forgiveness until at least 2035 because they are enrolled in an IDR program called Revised Pay As You Earn, or REPAYE, which wasn’t available until 2015.

Even so, the IDR waiver is likely to greatly increase their count of qualifying payments.

What will count toward IDR forgiveness?

The IDR payments review should result in loan discharges for:

  • Borrowers who have made 20 or 25 years of payments (240 and 300 monthly payments, respectively), under any payment plan.
  • Borrowers who submitted a PSLF application prior to Oct. 31, 2022, and who reach 120 payments as a result of changes to deferment qualifications outlined below.

If you’re unsure if this applies to you, here’s what to expect to count as a qualifying payment under the one-time review:

  • Any month a borrower was in repayment, regardless of partial payments, late payments, loan type or repayment plan.
  • Any month that loans were in an eligible repayment, deferment or forbearance status prior to consolidation.
  • Any month a borrower’s loan spent in 12 months of consecutive forbearance.
  • Any month a borrower’s loan spent in at least 36 cumulative months in forbearance.
  • Any month spent in deferment, except for in-school deferment, prior to 2013.

In July 2023, the Education Department expects to automatically apply the above payment count rules to all federal direct and government-owned Federal Family Education Loan Program loans. Those with privately-held FFELP loans must consolidate their debt into a new direct loan in order to have past payments counted.

Will Parent PLUS loans qualify?

Notably, parent PLUS borrowers are not included in the PSLF component of the recount. But parent PLUS loans are eligible for the IDR recount.

Will my servicer know if I qualify?

It’s unlikely your servicer will have immediate information. The recount is being processed through the Education Department.

You can get a ballpark idea of how many months are likely to count toward IDR forgiveness by logging into your Federal Student Aid account using your FSA ID. Your account should show all deferments and forbearances. In-school and grace period deferments will not count.

The Federal Student Aid office is expected to issue new guidance to servicers to improve income-driven repayment counting practices and will track payment counts in its own data systems.

What if I had delinquencies or a student loan in default?

Federal student loan payments are paused through 2022 as part of pandemic relief. As part of a “fresh start” opportunity included in an earlier student loan payment pause extension, borrowers with delinquent or defaulted student loan debt are expected to be returned to good standing when payments restart in January 2023.

However, these income-driven repayment plan fixes will not apply toward forgiveness for borrowers with loans in delinquency or default, according to the Education Department.

How does this fit in with other student debt relief?

Borrowers must wade through a large number of similar-sounding and sometimes overlapping student debt relief efforts launched since the beginning of the pandemic in 2020.

President Joe Biden’s signature effort is a broad cancellation of federal student loan debt of up to $20,000 per borrower, which is now facing pushback in court. Everyone should apply, just in case.

He also continued an interest-free pause of federal student loan payments begun by President Donald Trump. Payments are expected to resume in January 2023. Even those expecting a significant change in payment count will need to resume payments then until notified otherwise.

The department is also clearing backlogs of forgiveness applications from borrowers who were defrauded by their schools, faced school closures before attaining a degree, or have permanent disabilities. Those with pending claims are still eligible to apply for debt relief while they wait.