There is a limited-time student loan forgiveness opportunity available to many borrowers, with a deadline of April 30 to qualify. The U.S. Department of Education is offering a one-time adjustment of borrowers’ payments this summer, with the possibility of debt cancellation for those who request consolidation by the end of the month. This consolidation would leave borrowers with one larger loan and could lead to immediate or sooner debt cancellation.
Income-driven repayment plans, which have been around since 1994, calculate borrowers’ monthly payments based on a percentage of their discretionary income. These payments are usually lower than under a standard repayment plan and can even be zero under some plans. Borrowers in these plans typically have any remaining debt forgiven after 10, 20, or 25 years, depending on the specific plan. However, borrowers with multiple loans taken out at different times may have varying timelines to forgiveness for each loan.
The Biden administration is currently offering borrowers the opportunity to consolidate their loans and receive credit for payments as far back as their first loan payment on the oldest loan in the consolidated bundle. This could result in borrowers immediately qualifying for forgiveness on all loans, even if they would have had to wait years under normal circumstances. Through consolidation, borrowers may be able to accelerate their path to debt relief and take advantage of this limited-time offer.
All federal student loans, including Federal Family Education Loans, Parent Plus loans, and Perkins Loans, are eligible for consolidation. Borrowers can apply for a Direct Consolidation Loan either through StudentAid.gov or their loan servicer. As long as the application is submitted by April 30, borrowers should be eligible for the special consolidation terms, even if processing takes longer. Consolidating loans will not increase monthly payments under an income-driven repayment plan, as payments are based on earnings rather than total debt.
Before consolidating loans, it’s important for borrowers to obtain a complete payment history for each loan to ensure they receive the full credit they are entitled to. This can be done by accessing payment details on StudentAid.gov or requesting a record from your servicer. Payment history is based on when loans entered repayment, not when they were borrowed. If there are issues with payment count, borrowers can contact their servicer or submit a complaint to the Department of Education’s Federal Student Aid unit. It is important to note that borrowers should not have to pay a fee to consolidate their loans, as scammers may attempt to exploit the situation.
Overall, borrowers have until April 30 to take advantage of a one-time opportunity for student loan forgiveness through loan consolidation. By consolidating their loans, borrowers may be able to qualify for debt cancellation sooner than anticipated. It is essential for borrowers to understand the consolidation process, gather payment history for each loan, and take action before the deadline to maximize their chances of qualifying for loan forgiveness. As always, borrowers should be on the lookout for scammers and avoid paying fees for loan consolidation services.
