The deadline for student loan forgiveness is June 30. Here’s what you need to know

Student loan borrowers have until the end of June to meet a deadline that could lead to faster cancellation of their debt.

Some could even see their debt immediately erased.

Those with multiple student loans who apply for what’s called a loan consolidation before June 30 — a measure that consolidates multiple federal student loans into one new loan — can benefit from the temporary policy.

Here’s what borrowers should know.

Many student loan borrowers have multiple student loans, either because they borrowed repeatedly throughout their studies or because they returned to school at some point.

If these borrowers are enrolled in an income-driven repayment plan, this may mean that they are also on several different timelines before being forgiven. (Depending on the plan, borrowers can get forgiveness on any remaining debt after 10, 20, or 25 years.)

Under the temporary policy instituted by the Biden administration, borrowers who consolidate will get credit on all of their loans based on which one they pay off the longest. They will also get credits for certain periods that didn’t count before, including some months spent in deferment or forbearance.

“This will ensure people get the maximum number of months of credit for student debt cancellation,” Jane Fox, union president of the Legal Aid Society, previously said in an interview with CNBC.

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Consolidation while this policy is in place could be a good deal for many, experts say.

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 before July 1 could allow them to quickly benefit from forgiveness of all these loans, experts say, although they would normally have to wait at least 14 more years to obtain full relief.

“Many borrowers will benefit from complete debt forgiveness, especially those who have been paying for more than twenty years,” Fox said.

Usually, a student loan consolidation resets a borrower’s deadline for forgiveness, making it a terrible decision for those working toward forgiveness.

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, in a previous interview with CNBC.

You can apply for a Direct Consolidation Loan at StudentAid.gov or through your loan servicer. Experts estimate the process should take less than 15 minutes.

Some borrowers who took out small amounts may even be eligible for forgiveness after 10 years of payments if they enroll in the new income-driven repayment option, known as the Education Savings Plan. value, or SAVE.

Consolidating your loans shouldn’t increase your monthly payment, since your bill under an income-driven repayment plan is typically based on your income and not your total debt, Kantrowitz said.

The new interest rate will be a weighted average of your loan rates.