Borrowers with discontinued student loans now have additional time to consolidate their debt to benefit from a program offering extra credit toward full forgiveness. The new deadline for loan consolidation is June 30, allowing eligibility for an account adjustment set for September. The Department of Education extended this deadline, citing nearly 1 million borrowers who have already received forgiveness through the process.
The Biden administration has significantly changed student loan repayment rules to favor borrowers. As of April, these changes have led to $153 billion in loan forgiveness for 4.3 million people. However, these benefits apply only to federal loans, not private ones, necessitating consolidation for many borrowers.
Most current students take out Direct Loans from the federal government and are eligible for relief programs. In contrast, some borrow from private lenders and are ineligible for forgiveness. Previously, students borrowed through the Family Federal Education Loans (FFEL) program with commercial lenders; this program ended in 2010 but still affects 7.8 million borrowers as of mid-2024.
The Department of Education's Payment Count Adjustments Toward Income-Driven Repayment and Public Service Loan Forgiveness Programs aims to forgive or progress towards forgiveness for an estimated 3.6 million people—but only those with Direct Loans.
Income-driven repayment plans (IDRs) base monthly payments on income rather than debt amount and offer forgiveness after 20 or 25 years of payments. Public Service Loan Forgiveness (PSLF) offers similar benefits after ten years of service in government or nonprofit roles.
In 2022, the Department began correcting errors made by loan servicers that improperly placed borrowers in forbearance periods affecting their progress towards forgiveness. To rectify this, payment counts are being revised to include up to three years' worth of credit during such periods.
To benefit from this adjustment, borrowers must consolidate their loans into federal ones by June 30 without resetting their progress under IDR plans—an exception during this adjustment period.
To consolidate your student loans:
- Gather personal information: Social Security number, address, contact info.
- Check if your loans are FFEL type by logging onto studentaid.gov.
- Navigate to My Aid chart after logging in; view details under Loan Types.
- Confirm FFEL status and proceed with the Direct Consolidation Loan Application.
- If eligible for PSLF, indicate so on the application.
- Sign up for an income-driven repayment plan if needed.
- Provide two references (they won’t be responsible for your loan).
By following these steps before June 30th, you can take advantage of the extra credit offe
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