November 15, 2023
To: All NYS Licensed (or License Pending) Student Loan Servicers with Federal Family Education Loan Program Loan Portfolios and/or Perkins Loan Portfolios
Re: Industry Guidance on One-Time Adjustment of Federal Student Loans
The U.S. Department of Education (“USDOE”) has recently begun what USDOE describes as a one-time payment count adjustment (“One-Time Adjustment”) for certain federal student loans toward the Income-Driven Repayment (“IDR”) and Public Service Loan Forgiveness (“PSLF”) programs. The New York State Department of Financial Services (“Department”) is issuing this Industry Guidance to ensure that servicers of commercially owned Federal Family Education Loan (“FFEL”) Program loans and Perkins loans are aware themselves of the One-Time Adjustment and will make relevant borrowers aware of the One-Time Adjustment, specifically regarding the possibility that commercially owned FFEL borrowers and Perkins borrowers may be able to have their loans forgiven if they consolidate those loans into federal Direct loans by December 31, 2023.
The One-Time Adjustment will apply to Direct or government-owned FFEL borrowers who are either on an IDR plan (now or in the past) or working towards PSLF. Although there are a variety of processes involved in the One-Time Adjustment, in particular, covered loans that have been in repayment for at least 20 years (for undergraduate loans) or 25 years (for graduate loans) will be forgiven, and all covered loans will have their payment counts updated towards those goals. Although commercially owned FFEL loans and Perkins loans are not themselves covered by the One-Time Adjustment, borrowers who consolidate such loans into federal Direct loans by December 31, 2023 will receive the full benefits of the One-Time Adjustment.
Because of the life-changing potential of having one’s student loans forgiven, the Department expects all servicers with commercially owned FFEL or Perkins loans in their portfolios to take an active role in ensuring that relevant borrowers are able to benefit from the One-Time Adjustment. Consequently, recipients of this Industry Guidance should take the following steps on or before December 8, 2023:
- Proactively communicate to commercially owned FFEL and Perkins borrowers, whether through email, postal mail, text, or other means of communication, regarding the potential benefits of the One-Time Adjustment.
- Train customer service representatives on how borrowers can benefit for the One-Time Adjustment and how to assist borrowers in consolidating to a Direct loan as appropriate. This process should include updating call scripts and other internal guidance with current and accurate information for all relevant types of loans, including commercially owned FFEL and Perkins loans.
Servicers can direct borrowers to https://studentaid.gov/app/launchConsolidation.action to consolidate their commercially owned FFEL and Perkins loans into Direct loans before December 31, 2023.
Servicers with questions about this Industry Guidance should contact Terry McMahon, Senior Assistant Deputy Superintendent, at [email protected].
Samantha R. Darche
Consumer Protection and Financial Enforcement Division
 See USDOE, Payment Count Adjustments Toward Income-Driven Repayment and Public Service Loan Forgiveness Programs, available at https://studentaid.gov/announcements-events/idr-account-adjustment.