The U.S. Department of Education is providing a much-needed relief to student loan borrowers by extending the deadline to meet a key student loan forgiveness requirement. This move will give borrowers more time to consolidate their federal student loans and potentially have their debt forgiven sooner than expected.
Previously, the deadline to qualify for the Biden administration’s account adjustment was April 30. However, with the new extension, borrowers now have until June 30 to request a loan consolidation. This consolidation will combine all their federal student loans into one new federal loan, making it easier for borrowers to manage their debt.
Under Secretary of Education James Kvaal stated, “The Department is working swiftly to ensure borrowers get credit for every month they’ve rightfully earned towards forgiveness.” This statement highlights the Department’s commitment to helping borrowers navigate the complex student loan system and receive the benefits they are entitled to.
The extension also includes a one-time adjustment to the payment count for borrowers enrolled in an income-driven repayment plan. This means that borrowers will receive credit for all their loans based on the one they have been making payments on the longest. Additionally, certain periods that previously did not count towards forgiveness, such as months spent in deferment or forbearance, will now be included in the payment count.
This adjustment is especially beneficial for those pursuing the Public Service Loan Forgiveness program. By certifying their qualifying employment for the months included in the payment count adjustment, borrowers can receive additional credit towards their forgiveness. This is a significant step towards addressing the issues that have long plagued the student loan system.
The Biden administration’s decision to review the accounts of those in income-driven repayment plans in 2022 was prompted by evidence that borrowers were not receiving a proper accounting of their payments. A 2022 U.S. Government Accountability Office report and a Consumer Financial Protection Bureau study both highlighted the need for reform in the student loan system. The extension of the consolidation deadline and the payment count adjustment are crucial steps towards addressing these issues.
One of the most significant benefits of the payment count adjustment is that it helps borrowers who have been making payments for many years. By consolidating their loans, these borrowers can now qualify for forgiveness on all their loans, even if they were previously required to wait for several more years. This is particularly beneficial for those who carry multiple loans from different time periods.
For example, a borrower who graduated in 2004, took out more loans for a graduate degree in 2018, and is now in repayment under an income-driven plan with a 20-year timeline to forgiveness can now potentially have all their loans forgiven immediately. This is a significant relief for borrowers who would have had to wait another 14 years for full debt cancellation.
To take advantage of this opportunity, borrowers can apply for a Direct Consolidation Loan at StudentAid.gov or through their loan servicer. The 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.
Jane Fox, the chapter chair of the Legal Aid Society’s union, urges all borrowers to check if they are eligible for consolidation. She says, “Everyone who thinks there is even a possibility they may be eligible should take the time to find out. It is a quick phone call or a check of a website that could mean full cancellation of your student debt.”
Higher education expert Mark Kantrowitz also emphasizes the importance of checking eligibility for consolidation. He says, “If a borrower ends up with more payments than required for forgiveness, the extra payments may be refunded in some circumstances.” This is another significant benefit for borrowers who may have made more payments than necessary towards their forgiveness.
In conclusion, the U.S. Department of Education’s decision to extend the deadline for loan consolidation and provide a payment count adjustment is a much-needed relief for student loan borrowers. It not only gives them more time to consolidate their loans but also helps them qualify for forgiveness sooner. This move is a step in the right direction towards addressing the issues in the student loan system and providing much-needed support to borrowers.
