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Student loan forgiveness deadline extended by Biden administration

President Joe Biden delivers a speech on canceling student debt February 21, 2024 in Culver City, California.

Mario Tama | Getty Images News | Getty Images

The U.S. Department of Education is giving borrowers more time to meet a student loan forgiveness deadline.

Those who apply for so-called loan consolidation by June 30 — which will consolidate their federal student loans into one new federal loan — could get their debt canceled sooner than they otherwise would have. Some could even see their debt canceled immediately.

Previously, the deadline to benefit from the Biden administration’s accounting adjustment was April 30.

“The Department is working quickly to ensure borrowers get credit for each month they have rightfully earned toward forgiveness,” U.S. Undersecretary of Education James Kvaal said in a statement Wednesday.

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Through June 30, borrowers enrolled in an income-driven repayment plan who consolidate their funds will receive a one-time adjustment to their payment number.

They’ll get credit for all their loans based on which one they’ve been making payments on the longest, as well as for some periods that didn’t count before, including some months spent in deferments or forbearances.

Borrowers who follow the popular Public Service Loan Forgiveness program may also receive additional credit through the payment statement adjustment, provided they certify their eligible employment for those months.

The payment statement adjustment is an attempt to rectify long-standing problems for student loan borrowers.

The Biden administration said in 2022 it would review the accounts of people on income-driven repayment plans, which are supposed to lead to debt forgiveness after a set period.

His announcement followed evidence, including a 2022 U.S. Government Accountability Office report, showing that borrowers did not always get proper accounting of their payments. The Consumer Financial Protection Bureau also found that borrowers were unnecessarily forced into costly forbearances, during which interest accrues and credit for forgiveness is suspended.

How adjusting the number of payments helps borrowers

Usually, a student loan consolidation restarts a borrower’s forgiveness timeline, making it a terrible decision for those working toward forgiveness, education experts say.

Now, consolidation to take advantage of the opportunity to temporarily adjust the number of payments is a particularly attractive deal for borrowers who have been repaying their loans for many years and for those who have several loans over different periods. Now all these loans could be canceled soon.

For example, let’s say a borrower graduated from college in 2004, took out more loans to get a graduate degree in 2018, and is now repaying under an income-driven plan with a surrender period of 20 years. Consolidation could land them for immediate forgiveness on all those loans, experts say, although they would normally have to wait at least another 14 years to get full relief.

How to check if you would benefit from consolidation

“Anyone who thinks they might be eligible should take the time to educate themselves,” said Jane Fox, president of the union chapter of the Legal Aid Society. “All it takes is one phone call or a check on a website that could mean total cancellation of your student debt.”

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You can apply for a Direct Consolidation Loan at StudentAid.gov or through your loan servicer. It should take less than 15 minutes, Fox said.

All federal student loans — including Federal Family Education Loans, Parent Plus Loans and Perkins Loans — are eligible for consolidation, said higher education expert Mark Kantrowitz.

“If a borrower ends up with more payments than necessary for forgiveness, the extra payments may be refunded in certain circumstances,” Kantrowitz said.


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