Federal Student Loan Debt Relief in the Context of COVID-19
Released: 2020-04-16T00:00:00

Introduction

The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes the operation of three federal s tudent loan programs: the William D. Ford Federal Direct Loan (Direct Loan) program, the Federal Family Education Loan (FFEL) program, and the Federal Perkins Loan program. While new loans are authorized to be made only through the Direct Loan program, FFEL and Perkins Loan program loans remain outstanding and borrowers of such loans remain responsible for repaying them.

As of December 31, 2019, $1.5 trillion in these loans, borrowed by or on behalf of 42.8 million individuals, remained outstanding.

Direct Loan program loans are owned by the U.S. Department of Education (ED). As of December 31, 2019, approximately 35.3 million borrowers owed about $1.3 trillion in Direct Loan debt. FFEL program loans may be held by private lenders, guaranty agencies, or ED. As of December 31, 2019, approximately 11.8 million borrowers owed about $257.2 billion in FFEL program debt. Of that, approximately $87.7 billion was held by ED, representing between 3.3 million and 6 million borrowers, and $169.3 billion was held by private lenders or guaranty agencies, representing debt for between 6.0 million and 7.2 million borrowers. Perkins Loan program loans may be held by institutions of higher education (IHEs) that made the loans or by ED. As of December 31, 2019, about 1.9 million borrowers owed approximately $5.9 billion in Perkins Loans.

In response to the current coronavirus disease 2019 (COVID-19) pandemic, numerous questions have arisen regarding student loan repayment flexibilities and debt relief that may be available to individuals to alleviate potential financial effects related to COVID-19. The HEA generally authorizes several options for qualifying individuals. Recent administrative and congressional action, including the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ), provide additional student loan relief measures.

This report provides an overview of student loan repayment flexibilities and debt relief provisions that may be available to borrowers facing financial difficulties resulting from the pandemic. It first lists some pre-existing loan terms and conditions (authorized through statute and regulations) that may be available to individuals. It then discusses specific administrative and congressional actions taken to address student loan debt in the context of COVID-19. The report concludes with a brief description of additional existing authorities that could be utilized to address other aspects of student loan relief.

Pre-existing Loan Terms and Conditions

Several loan terms and conditions that offer forms of repayment relief to borrowers were authorized in statute and regulations prior to the onset of the COVID-19 pandemic. These include periods of deferment and forbearance, which offer borrowers temporary relief from the obligation to make monthly payments; and the availability of income-driven repayment (IDR) plans (e.g., income-based repayment, Pay As You Earn [PAYE]), which afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income, for a maximum repayment period of 20 or 25 years.

Deferment

A deferment is a temporary period during which a borrower's obligation to make regular monthly payments of principal or interest is suspended, and during which an interest subsidy (i.e., interest does not accrue) may be provided. Where an interest subsidy is not provided, unpaid interest that has accrued on a borrower's loan during a deferment is capitalized (i.e., added to the principal) at the expiration of the deferment period. Periods of deferment do not count toward the 120 monthly payments required to qualify for Public Service Loan Forgiveness (PSLF), and most are not included in a borrower's repayment period (e.g., periods of unemployment deferment do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). In most instances, a borrower must proactively apply for and request a deferment.

A deferment may be granted for a variety of reasons. Unemployment deferment and economic hardship deferment (described below) may be especially relevant to individuals facing financial difficulties due to COVID-19. These types of deferment are available to borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs.

Unemployment Deferment

A borrower who is seeking to obtain full-time employment and is either not employed or employed less than full-time may be granted an unemployment deferment . To be eligible, a borrower must either be receiving unemployment benefits or document that he or she has registered with a public or private employment agency (if one is available within 50 miles) and is diligently seeking to obtain full-time employment.

The deferment may be granted for an initial six-month period, and may be extended in six-month increments. A borrower may receive the deferment for a maximum cumulative period of three years, which may include one or more episodes of unemployment.

During an unemployment deferment, an interest subsidy is provided on Direct Subsidized Loans, the subsidized component of Direct Consolidation Loans, FFEL Stafford (Subsidized) Loans, the subsidized component of FFEL Consolidation Loans, and Perkins Loans.

Economic Hardship Deferment

A borrower may qualify for a deferment during periods while he or she is experiencing an economic hardship. To qualify, a borrower must be (1) receiving payments under a federal or state public assistance program (e.g., Temporary Assistance for Needy Families [TANF], Supplemental Security Income [SSI], Supplemental Nutrition Assistance Program [SNAP], state general public assistance, other means-tested benefits), or (2) working full-time and have a monthly income that does not exceed an amount equal to 150% of the poverty line applicable to the borrower's family size, as calculated on a monthly basis.

The deferment may be granted for periods of up to one year at a time, and may be extended up to a cumulative maximum of three years. Periods of up to three years while a borrower qualifies for an economic hardship deferment may be counted as part of the repayment period for each of the IDR plans.

During an economic hardship deferment, an interest subsidy is provided on Direct Subsidized Loans, the subsidized component of Direct Consolidation Loans, FFEL Stafford Loans, the subsidized component of FFEL Consolidation Loans, and Perkins Loans.

Forbearance

Forbearance constitutes permission for a borrower to temporarily cease making monthly payments, to make payments in reduced amounts, or to make payments over an extended period of time. During periods of forbearance, no interest subsidies are provided (i.e., interest continues to accrue) and borrowers ultimately remain responsible for paying all of the interest that accrues on their loans. Borrowers may pay the interest as it accrues during forbearance. At the end of the forbearance period, any unpaid accrued interest is capitalized into the principal balance of Direct Loan program and FFEL program loans; it is not capitalized (but remains due) for Perkins Loan program loans. Periods of forbearance do not count toward the 120 monthly payments required to qualify for PSLF, and are not included in a borrower's repayment period (e.g., periods of student loan debt burden forbearance do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). Generally, borrowers must apply for forbearance.

General forbearance and student loan debt burden forbearance (described below) may be especially relevant to individuals facing financial difficulties due to COVID-19. These types of forbearance are available to borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs.

General Forbearance

A borrower may request a general forbearance (sometimes referred to as a discretionary forbearance) on the basis of experiencing a temporary hardship due to financial difficulties, a change in employment, medical expenses, or other reasons.

General forbearance may be granted for an initial period of up to 12 months, renewed upon the borrower's request, and limited to a maximum of 36 months. At the end of the forbearance period, any unpaid interest that accrued during the period is capitalized.

Student Loan Debt Burden Forbearance

A borrower may receive a forbearance on the basis of having a federal student loan debt burden that equals or exceeds 20% of his or her total monthly taxable income. To qualify, a borrower must demonstrate that his or her required monthly payments on HEA Title IV federal student loans (e.g., loans made under the Direct Loan, FFEL, or Perkins Loan programs) equal or exceed that amount.

Student loan debt burden forbearance may be granted for an initial period of up to 12 months, may be renewed upon the borrower's request, and is limited to a maximum of 36 months.

Income-Driven Repayment Plans

IDR plans afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income over a repayment period not to exceed 20 to 25 years, depending on the plan. At the end of the repayment period, the remaining balance of an individual's loans is forgiven. Under these plans, it is possible for a borrower's monthly payment to equal $0.

There are several IDR plans currently available to borrowers: the Income-Contingent Repayment (ICR) plan, the Income-Based Repayment (IBR) plans (one version of which is available to individuals who qualify as a new borrower on or after July 1, 2014; and another which is available to individuals who do not qualify as a new borrower as of that date), the Pay As You Earn (PAYE) repayment plan, and the Revised Pay As You Earn (REPAYE) repayment plan. In general, Direct Loan borrowers (other than Parent PLUS Loan borrowers) are eligible for any of these plans. FFEL program borrowers (other than Parent PLUS loan borrowers) are only eligible for the IBR plans. Perkins Loan borrowers are not eligible for any IDR plan.

Individuals must apply to repay their loans according to an IDR plan. In addition, they must annually provide documentation of their income and family size to remain eligible for IDR repayment. Borrowers may update their income and family size at any time if either changes. Upon submission of such information, a borrower's monthly payment amount will be recalculated accordingly.

Administrative and Congressional Actions Taken in Response to COVID-19

Recently, ED and Congress have taken steps to provide additional forms of relief to federal student loan borrowers. This includes cancelling Direct Loans for payment periods during which qualifying individuals withdrew from their course of study due to COVID-19, waiving Direct Subsidized Loan limitations for students affected by COVID-19, temporarily setting interest rates to 0% on qualifying loans, expanding the instances under which a forbearance may be available to borrowers of qualifying loans, and temporarily ceasing collections on qualifying defaulted loans.

Returning Direct Loans

Under the HEA, a Direct Loan borrower may be required to return or repay all or part of the Direct Loans borrowed if the student does not complete a payment or enrollment period at an IHE for which the loan was received. Required procedures for such returns or repayments vary depending on whether a student did not begin attendance at an IHE or whether he or she withdrew.

Failure to Begin Attendance

If a student does not begin attendance at an IHE in a payment or enrollment period, Title IV funds (including Direct Loan funds) must be returned to ED by the IHE and/or the student according the regulatory provisions. For Direct Loan amounts required to be returned by the student, the IHE must immediately notify ED (or its loan servicers) when it becomes aware that the student will not begin or has not begun attendance. Loan servicers then issue a final demand letter to the borrower. The demand letter requires the borrower to repay any loan principal and accrued interest within 30 days from the date the letter is mailed. If the borrower fails to comply with the demand letter, he or she is considered in default on the loan.

In March 2020, ED issued guidance to IHEs specifying some flexibilities that may be used to address the return of Direct Loans by recipients who did not begin attendance at an IHE due to COVID-19. ED stated that if a student was unable to begin attendance due to a COVID-19-related school closure, the IHE is not required to notify the loan servicer of the student's failure to begin attendance. By waiving this requirement, loan servicers would not issue demand letters, and borrowers would be able to repay any loans according to the terms of the promissory note, including receiving a six-month grace period prior to the start of repayment.

Withdrawal

HEA Section 484B specifies that when a Title IV aid recipient withdraws from an IHE before the end of the payment or enrollment period for which funds were disbursed, Title IV funds (including any Direct Loans received) must be returned to ED by the IHE and/or aid recipient according to statutorily prescribed rules (this is often referred to as Return of Title IV Aid). If an aid recipient is required to return any portion of a Direct Loan, he or she repays it in accordance with the terms of the loan.

The CARES Act authorizes several waivers with respect to Return of Title IV Aid procedures. Specific to Direct Loan borrowers, the act requires ED to cancel a borrower's obligation to repay the entire portion of a Direct Loan associated with a payment period during which the student withdraws from an IHE as a result of a qualifying emergency .

Direct Subsidized Loan Limitations

Since July 1, 2013, a student who is a first-time borrower may only borrow Direct Subsidized Loans for a period that may not exceed 150% of the published length of the academic program in which he or she is currently enrolled (e.g., six years for enrollment in a four-year bachelor's degree program). This is referred to as the Direct Subsidized Loan maximum eligibility period.

If a Direct Subsidized Loan borrower subject to this provision remains enrolled beyond the applicable maximum eligibility period, he or she will lose the interest subsidy and will become responsible for paying the interest that accrues on his or her Direct Subsidized Loans after the date that the maximum eligibility period is exceeded.

The CARES Act specifies that ED shall exclude from the maximum eligibility period any semester (or equivalent) that the student does not complete due to a qualifying emergency, if ED is "able to administer such policy in a manner that limits complexity and the burden on the student."

Entering Repayment

In general, borrowers of Direct Loan, FFEL, and Perkins Loan program loans are required to make payments on the loans during a repayment period. The repayment period for Direct Subsidized Loans, Direct Unsubsidized Loans, FFEL Stafford Loans, FFEL Unsubsidized Loans, and Perkins Loans begins after a grace period. The grace period begins after the borrower ceases to be enrolled in an eligible postsecondary program on at least a half-time basis (enrollment on at least a half-time basis is often referred to as in-school status for federal student loan purposes). The repayment period for Direct PLUS Loans (to graduate students and to parents of dependent undergraduate students), Direct Consolidation Loans, FFEL PLUS Loans, and FFEL Consolidation Loans is required to begin when the loan is fully disbursed. However, borrowers of these loans, along with borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, FFEL Stafford Loans, FFEL Unsubsidized Loans, and Perkins Loans, may qualify for a deferment on the basis of their in-school status (or the in-school status of the student on whose behalf a PLUS Loan was made to a parent borrower), during which time they are not required to make payments on their loans but interest may accrue. A borrower qualifies for such an in-school deferment if he or she, or the student on whose behalf a PLUS Loan is made, is enrolled on at least a half-time basis.

ED has announced some flexibilities for borrowers of Direct Loan and FFEL program loans whose loan status was in-school on the date the student's attendance at an IHE was interrupted due to COVID-19. The loan status of such borrowers will continue to be reported as in-school until the IHE determines that the student has withdrawn from it. ED has permitted IHEs to defer reporting a student's withdrawn status if the IHE has a reasonable expectation that it will reopen at the start of a payment period that begins no later than 90 days following its COVID-19-related closure and that the student will resume attendance when the IHE reopens.

ED guidance does not address Perkins Loans.

Interest Accrual

Interest is charged on loans made under the Direct Loan, FFEL, and Perkins Loan programs. Typically, under a limited set of circumstances the federal government subsidizes some or all of the interest that would otherwise accrue on certain Direct Subsidized Loans, FFEL Stafford Loans, and Perkins Loans.

For March 13, 2020, through September 30, 2020, the Administration has set interest rates on federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) to 0%. The CARES Act specifies that during this time interest will not accrue. This means borrowers will not be responsible for paying interest on their ED-held loans for this period. This will permit borrowers to enter into a period of deferment or forbearance without concern for whether interest would accrue and capitalize. Borrowers who continue making payments on their loans during this time of 0% interest will not have decreased monthly payments. They will have the full amount of the payments applied toward loan principal. Borrowers who are eligible for this benefit need not apply for it; ED will automatically adjust their accounts to reflect the 0% interest.

In addition, ED has authorized FFEL program lenders and institutions that hold Perkins Loans to provide the same 0% interest rate on these nonfederally held loans on a voluntary basis. Borrowers who are ineligible for the 0% interest rate benefit because their FFEL program loan holder or Perkins Loan program IHE is not providing it may take advantage of the 0% interest period by consolidating such loans into a Direct Consolidation Loan, which is eligible for the 0% interest rate.

This 0% interest rate, coupled with the various options for temporary cessation of payments (e.g., forbearance, deferment) discussed throughout this report, means that qualifying borrowers may temporarily cease payments on their loans without interest accruing or being subject to capitalization when they begin to make payments again at a later point in time.

Cessation of Payments

In addition to the pre-existing deferment and forbearance options available to borrowers, ED and Congress have recently taken further steps to enable borrowers to temporarily cease making payments on their qualifying loans.

For March 13, 2020, through September 30, 2020, federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) will be placed in an administrative forbearance. During this time, borrowers will not be required to make payments due on their loans. Borrowers who are eligible for this benefit need not apply for it; ED will automatically suspend payments.

In implementing these provisions, ED has indicated that borrowers may opt out of this special administrative forbearance by contacting their loan servicer. In addition, any payments made on a borrower's account between March 13, 2020, and September 30, 2020, can be refunded to the borrower. A borrower must contact his or her loan servicer to request a refund.

ED has also authorized FFEL program lenders and institutions that hold Perkins Loans to provide this special administrative forbearance to borrowers on a voluntary basis. Borrowers who are ineligible for this benefit because their FFEL program loan holder or Perkins Loan program IHE is not providing it may take advantage of the benefit by consolidating such loans into a Direct Consolidation Loan.

Generally, periods of forbearance do not count toward the 120 monthly payments required to qualify for PSLF, and are not included in a borrower's repayment period (e.g., periods of unemployment deferment do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). However, the CARES Act specified that ED "shall consider each month for which a loan payment was suspended" under this special administrative forbearance "as if the borrower of the loan had made a payment for the purpose of any loan forgiveness program or loan rehabilitation program." Thus, for Direct Loan borrowers (the only borrowers eligible for PSLF) this special administrative forbearance will count toward the 120 monthly payments required to qualify for PSLF if the borrower was in a qualifying repayment plan prior to the payment suspension and also works full-time in qualifying employment during the suspension.

For borrowers of federally held loans, the suspended payments will also count toward the 20- and 25-year repayment periods under the IDR plans, and toward the nine voluntary payments within 10 consecutive months required for individuals to rehabilitate their defaulted loans. It is unclear whether suspended payments on nonfederally held FFEL program loans whose lender has authorized this special administrative forbearance would count toward the 20- and 25-year repayment periods under applicable IDR plans. Perkins Loans, regardless of whether they are held by ED or an IHE, are ineligible for IDR plans.

In addition, ED recently authorized institutions that hold Perkins Loans to grant a forbearance to borrowers who are in repayment and are unable to make payments due to COVID-19. Under this forbearance, interest would continue to accrue. The initial forbearance period may not exceed three months, but it may be extended upon a borrower providing supporting documentation. Borrowers must request the forbearance from the IHE. This period of forbearance counts toward the three-year maximum limit on the number of years of forbearance that may be granted to a Perkins Loan borrower.

Loan Default and Collections

Defaulting on a federal student loan can result in a number of adverse consequences for a borrower. Upon default, the borrower's obligation to repay the loan is accelerated (i.e., the entire unpaid balance of principal and interest becomes due in full). In addition, the borrower loses eligibility for certain borrower benefits (e.g., deferment, loan forgiveness), as well as eligibility to receive additional Title IV federal student aid. A defaulted borrower may have his or her student loan account transferred to an ED-contracted private collection agency (PCA) that will contact the borrower and offer him or her options for voluntary debt resolution, such as loan rehabilitation, consolidation out of default, or entry into a voluntary repayment agreement. If such voluntary debt resolution attempts do not succeed, involuntary collection practices may be utilized, which include administrative wage garnishment; offset of federal income tax returns, Social Security benefits, and certain other federal benefits; and civil litigation.

Collection of Defaulted Loans

For March 13, 2020, through September 30, 2020, ED will halt the above-described involuntary debt collection practices, and ED-contracted PCAs will stop proactive collection activities (i.e., stop making collection calls and sending letters or billing statements to defaulted borrowers) for all federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED). However, borrowers may contact PCAs to continue repayment arrangements they had made prior to implementation of this policy or to consolidate their loans out of default.

Borrowers of federally held loans whose federal tax refund or Social Security benefits were in the process of being withheld on or after March 13, 2020, and before September 30, 2020, will have any offset portion returned to them. Borrowers whose wages were garnished between March 13, 2020, and September 30, 2020, will have their wages refunded.

In addition, ED has authorized institutions to stop collection activities on defaulted Perkins Loans that they hold through September 30, 2020, upon notification from a borrower, a member of the borrower's family, or another reliable source that the borrower has been affected by COVID-19.

Satisfactory Repayment Arrangements, Loan Rehabilitation, and Consolidation Out of Default

To regain Title IV student aid eligibility, a defaulted federal student loan borrower must make six on-time, voluntary monthly payments on a defaulted loan. In addition, loan rehabilitation offers defaulted borrowers an opportunity to have their loan(s) reinstated as active and to have other borrower benefits and privileges restored. To rehabilitate a loan, Direct Loan, FFEL, or Perkins Loan program borrowers must make nine on-time payments according to generally applicable procedures. Alternatively, a borrower may use the proceeds of a new Direct Consolidation Loan to pay off one or more defaulted Direct Loan, FFEL, and Perkins Loan program loans. To become eligible to do so, a borrower must make three consecutive, on-time, full monthly payments on a defaulted loan.

ED has stated that for specified periods, if a borrower of a defaulted Direct Loan, FFEL, or Perkins Loan program loan fails to make any of the consecutive monthly payments required to re-establish eligibility for Title IV federal student aid, to rehabilitate such defaulted loans, or to consolidate such defaulted loans out of default, the borrower shall not be considered to have missed any of those payments.

Reporting to Consumer Reporting Agencies

Information about a borrower's federal student loans is reported to nationwide consumer reporting agencies on a regular basis. Information reported includes items such as loan amount and repayment status (e.g., whether a borrower is current on making payments).

The CARES Act specifies that through September 30, 2020, ED shall ensure that any payment that has been suspended under the special administrative forbearance described above shall be reported to a consumer reporting agency as if it were a regularly scheduled payment made by the borrower.

Teacher Loan Forgiveness

The Teacher Loan Forgiveness program provides loan forgiveness benefits to borrowers of qualifying Direct Loan and FFEL program loans. To qualify for benefits, a borrower must serve as a full-time teacher for at least five consecutive complete academic years in a qualifying school or public education service agency that serves children from low-income families.

The CARES Act specifies that ED shall waive the requirement that years of qualifying teaching service be consecutive if an individual's service was temporarily interrupted due to a qualifying emergency, and after such temporary disruption the borrower resumes teaching and ultimately completes a total of five years of qualifying service. Qualifying service may include service performed before, during, and after the qualifying emergency.

Additional Flexibilities

In addition to the above-described administrative and congressional actions that have been taken in response to COVID-19, further flexibility and authority is provided through the Higher Education Relief Opportunities for Students Act (HEROES Act). The HEROES Act can only be implemented, however, in connection with a war or other military action or a national emergency declared by the President. The HEROES Act provides the Secretary with authority to waive or modify statutory and regulatory requirements that apply to the HEA Title IV student aid programs in an effort to help affected individuals. There are three categories of affected individuals:

1. those who are serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency; 2. those who reside or are employed in an area that is declared a disaster area by any federal, state, or local official in connection with a national emergency; and 3. those who suffered direct economic hardship as a direct result of a war or other military operation or national emergency.

Examples of support that may be available to student loan borrowers under the HEROES Act include the following:

For borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs who are in the 1 st or 2 nd categories of affected individuals, the initial grace period excludes any period, not to exceed three years, during which a borrower is an affected individual. Borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs who were in an "in-school" status but left school because they became a 1 st or 2 nd category affected individual may retain their in-school status for up to three years. During this period, the Secretary will pay any interest that accrues on a FFEL Stafford Loan. Borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs who were in an "in-school" deferment or a graduate fellowship deferment but left school because they became a 1 st or 2 nd category affected individual may retain their deferment for a period of up to three years during which they are affected. During this period, the Secretary will pay any interest that accrues on a FFEL Stafford Loan. For borrowers of Perkins Loans who are in the 1 st or 2 nd categories of affected individuals, any forbearance granted on the basis of their status as an affected individual is excluded from the usual three-year limit on forbearance. Also, for these categories of affected individuals, borrowers of Perkins Loans may be granted forbearance based on an oral request and without written documentation for a one-year period and an additional three-month transition period. Borrowers of FFEL program loans who are in the 1 st or 2 nd categories of affected individuals may be granted forbearance based on an oral request and without written documentation for a one-year period and an additional three-month transition period. For borrowers that may qualify for Teacher Loan Forgiveness (Direct Loan and FFEL program borrowers) or Perkins Loan Cancellation (Perkins Loan program borrowers) on the basis of continuous or uninterrupted qualifying service, such service will not be considered interrupted by any period during which they are in the 1 st or 2 nd categories of affected individuals or during a three-month transition period. For borrowers who defaulted on Direct Loan, FFEL, or Perkins Loan program loans and are seeking to rehabilitate their loans by making nine on-time payments according to generally applicable procedures, any payments missed during periods when they are in the 1 st or 2 nd categories of affected individuals or during a three-month transition period shall not be considered an interruption in the series of payments required for loan rehabilitation. For borrowers who defaulted on Direct Loan, FFEL, or Perkins Loan program loans and are seeking to reestablish eligibility for Title IV federal student aid by making six consecutive on-time payments, any payments missed during periods when they are in the 1 st or 2 nd categories of affected individuals or during a three-month transition period shall not be considered an interruption in the series of payments required for purposes of reestablishing Title IV eligibility. For borrowers who defaulted on Direct Loan or FFEL program loans and are seeking to consolidate loans out of default, any payments missed during the period when they are in the 1 st or 2 nd category of affected individuals or during a three-month transition period shall not be considered an interruption in the series of payments required for purposes of reestablishing Title IV aid eligibility. Borrowers who are repaying their Direct Loan or FFEL program loans according to an IDR plan and because of their status as 1 st or 2 nd category affected individuals are unable to provide information normally required annually to document their income and family size may maintain their current payment amount for a period of up to three years, including a three-month transition period. This flexibility is made in lieu of having their payment amount adjusted to be based on a standard 10-year repayment plan or an alternative repayment plan, as applicable.