The U.S. Department of Education has extended the deadline for borrowers to request a loan consolidation in order to qualify for key student loan forgiveness. This initiative, which will combine federal student loans into one new federal loan, could potentially result in debt cancellation for borrowers. The deadline for this loan consolidation request has now been extended to June 30, allowing borrowers more time to take advantage of this opportunity.
Until June 30, borrowers enrolled in an income-driven repayment plan who choose to consolidate their loans will receive a one-time adjustment on their payment count. This adjustment will allow borrowers to earn credit toward all their loans based on the one they have been making payments on the longest. Additionally, certain periods that previously did not count towards loan forgiveness, such as months spent in deferments or forbearances, will now be included in the calculation.
Borrowers pursuing the popular Public Service Loan Forgiveness program can also benefit from the payment count adjustment. By certifying their qualifying employment for those months, borrowers can receive additional credit towards their loan forgiveness. This adjustment is an attempt to address longstanding issues that student loan borrowers have faced in the past.
Review of Income-Driven Repayment Plans
In 2022, the Biden administration announced that it would review the accounts of those in income-driven repayment plans. Evidence showed that borrowers were not always receiving a proper accounting of their payments, leading to confusion and frustration. The payment count adjustment aims to rectify these issues and provide borrowers with a clearer path to debt cancellation.
While student loan consolidation typically restarts a borrower’s forgiveness timeline, the temporary payment count adjustment opportunity presents a unique opportunity for borrowers. This is especially beneficial for those who have been making payments on their loans for many years, as well as for those who have multiple loans from different time periods. By consolidating their loans, borrowers could potentially qualify for debt forgiveness sooner than expected.
Borrowers can apply for a Direct Consolidation Loan at StudentAid.gov or through their loan servicer. The application process is quick and straightforward, taking under 15 minutes to complete. All federal student loans, including Federal Family Education Loans, Parent Plus loans, and Perkins Loans, are eligible for consolidation. If a borrower ends up with more payments than required for forgiveness, the extra payments may be refunded in certain circumstances.
The extended deadline for loan consolidation offers borrowers a unique opportunity to accelerate their journey towards student loan forgiveness. By taking advantage of the payment count adjustment, borrowers can potentially have their debt canceled sooner than expected. It is important for borrowers to explore this option and take the necessary steps to consolidate their loans before the June 30 deadline.