The U.S. Department of Education is extending the deadline for borrowers to qualify for a student loan forgiveness program by allowing them to consolidate their federal student loans into one new federal loan. This loan consolidation must be requested by June 30 in order to potentially have debt forgiven sooner or even immediately. Previously, the deadline was April 30, but now borrowers in an income-driven repayment plan who consolidate by the new deadline will receive a one-time adjustment on their payment count, earning credit towards all of their loans based on the one they have been making payments on the longest.
The payment count adjustment is part of an effort by the Biden administration to address longstanding issues for student loan borrowers, particularly in income-driven repayment plans. These plans are meant to lead to debt cancellation after a certain period, but evidence suggested that borrowers were not always getting a proper accounting of their payments. By allowing borrowers to consolidate their loans and take advantage of the temporary payment count adjustment opportunity, those who have been paying off loans for many years or have multiple loans from different time periods could find themselves eligible for earlier debt forgiveness.
This opportunity for loan consolidation and payment count adjustment is particularly beneficial for borrowers who would normally have to wait many more years before qualifying for debt forgiveness. For example, a borrower who graduated in 2004, took out more loans for a graduate degree in 2018, and is now in a 20-year income-driven repayment plan may now be able to qualify for immediate forgiveness on all of those loans by consolidating. This provides a significant relief for borrowers who may have been struggling with student loan debt for years.
To determine if they would benefit from loan consolidation, borrowers are encouraged to check their eligibility and options by applying for a Direct Consolidation Loan either through StudentAid.gov or with their loan servicer. This process should take under 15 minutes to complete and is available for all types of federal student loans, including Federal Family Education Loans, Parent Plus loans, and Perkins Loans. If a borrower ends up with more payments than required for forgiveness, they may even be eligible for refunds in certain circumstances.
Overall, the payment count adjustment program provides an opportunity for student loan borrowers to potentially have their debt forgiven sooner by taking advantage of the window for loan consolidation offered by the U.S. Department of Education. By ensuring borrowers receive proper credit for all their payments and time towards forgiveness, this initiative aims to address the challenges faced by many borrowers in income-driven repayment plans and improve their prospects for achieving debt relief. Borrowers are advised to explore their options and potential benefits by considering loan consolidation before the June 30 deadline to take advantage of this unique opportunity.
