Six Weeks Remaining to Consolidate Student Loan Debt: It’s the last chance to consolidate your student loans and eliminate your debt.
During the summer, borrowers who consolidate federal student loans will get a one-time payment adjustment until April 30. Anyone hurt by loan servicing failures can receive credit for the time they have already spent in repayment by consolidating debt. The deadline for consolidating debt was extended from December 31 to April 30.
In an income-driven repayment plan (IDR), loans can be canceled after 10, 20, or 25 years if all debt payments are counted. By making sure all payments are counted, borrowers might be able to get their remaining student loan balances canceled or closer to it. If borrowers qualify for Public Service Loan Forgiveness (PSLF), these extra payment periods count toward that program. The Department of Education will also refund any additional payments uncovered.
This one-time initiative “provides much-needed relief to borrowers who have been in repayment for 20 years or more and gives all other borrowers an accurate picture of their progress toward forgiveness going forward,” Richard Cordray, chief operating officer of the Federal Student Aid Office, wrote in a blog post last December.
In January, the Biden administration said that updated payment counts had so far provided $45.7 billion in relief for 930,500 borrowers.
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How to get a one-time adjustment
Borrowers with federally held loans don’t need to do anything. The Department of Education makes automatic adjustments to their loans.
For the payment count adjustment to apply, borrowers with private Federal Family Education Loans (FFEL), Perkins loans, or Health Education Assistance Loans (HEAL) loans must apply for a Direct Consolidation Loan by April 30. The Department of Education says most borrowers who make qualifying payments that exceed the forgiveness period of 20 or 25 years will receive a refund for their overpayment.
This one-time adjustment will automatically cancel your Parent PLUS loan if you have been paying it off for 25 years – or 300 months – under the Department of Education. In order to receive the one-time adjustment benefit, Parent PLUS borrowers with less than 25 years should consolidate their loans by the end of April.
What type of loan do I have?
- Visit StudentAid.gov.
- To view your loans, click the “Loan Breakdown” section on your dashboard.
- Direct Loans begin with the word “Direct.” Federal Family Education Loan Program loans begin with “FFEL.” Perkins Loans begin with “Perkins.” Your FFEL or Perkins loan is already held by the Education Department if the servicer’s name starts with “Dept. of Ed” or “Default Management Collection System.” Your loan must be consolidated by April 30 if it is privately held.
