President Joe Biden delivers remarks on canceling student debt on February 21, 2024 in Culver City, California.
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The U.S. Department of Education is giving borrowers more time to meet a key student loan forgiveness deadline.
Those who request a so-called loan consolidation by June 30 — which will combine their federal student loans into one new federal loan — could get their debt canceled sooner than they would have otherwise. Some could even see theirdebt forgiven immediately.
Previously, the deadline to qualify for the Biden administration's account adjustment was April 30.
"The Department is working swiftly to ensure borrowers get credit for every month they've rightfully earned toward forgiveness," U.S. Under Secretary of Education James Kvaal said in a statement Wednesday.
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Until June 30, borrowers enrolled in an income-driven repayment plan who consolidate will get a one-time adjustment on their payment count.
They'll earn credit toward all their loans based on the one they have been making payments on the longest, as well as for certain periods that previously didn't count, including certain months spent in deferments or forbearances.
Borrowers pursuing the popular Public Service Loan Forgiveness program can also receive additional credit from the payment count adjustment, as long as they certify their qualifying employment for those months.
The payment count adjustment is an attempt to rectify longstanding issues for student loan borrowers.
The Biden administration said in 2022 it would review the accounts of those in income-driven repayment plans, which are supposed to lead to debt cancellation after a set period.
Its announcement followed evidence, including a 2022 U.S. Government Accountability Office report, showing borrowers weren't always getting a proper accounting of their payments. The Consumer Financial Protection Bureau also found that borrowers were needlessly steered into expensive forbearances, during which interest accrues and credit toward forgiveness is paused.
How the payment count adjustment helps borrowers
Usually, a student loan consolidation restarts a borrower's forgiveness timeline, making it a terrible move for those working toward cancellation, education experts say.
Now, consolidating to take advantage of the temporary payment count adjustment opportunity is an especially good deal for borrowers who've been paying off loans for many years, and for those who carry multiple loans from different time periods. Now all those loans could be soon forgiven.
For example, say a borrower graduated from college 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. Consolidating could lead them to immediately qualify for forgiveness on all of those loans, experts say, even though they'd normally need to wait at least another 14 years for full relief.
How to check if you'd benefit from consolidation
"Everyone who thinks there is even a possibility they may be eligible should take the time to find out," said Jane Fox, the chapter chair of the Legal Aid Society's union. "It is a quick phone call or a check of a website that could mean full cancellation of your student debt."
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You can apply for aDirect Consolidation Loanat StudentAid.gov or with your loan servicer. It should take under 15 minutes to do so, Fox said.
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.
"If a borrower ends up with more payments than required for forgiveness, the extra payments may be refunded in some circ*mstances," Kantrowitz said.
FAQs
Many student loan borrowers have an opportunity to receive full student loan cancellation or more credit towards cancellation. The U.S. Department of Education will conduct a one-time adjustment this summer , but you may need to take steps to qualify. The deadline to act is June 30, 2024. Here's what you need to know.
What is going on with student loan forgiveness in 2024? ›
Income-Driven Repayment (IDR) Forgiveness
Your loan forgiveness timeline and monthly payment amount depend on which IDR plan you're eligible to choose from. The SAVE Plan includes additional forgiveness benefits that will go into effect in February and July 2024.
Why are my student loans in administrative forbearance in June 2024? ›
SAVE administrative forbearance
The Education Department is putting all SAVE borrowers into an administrative forbearance indefinitely, after the 8th U.S. Circuit Court of Appeals blocked the income-driven student loan repayment plan following SAVE lawsuits filed by groups of Republican-led states.
Are student loans not due until 2024? ›
After three and a half years of a pandemic-related payment pause, federal student loan bills resumed in October 2023. If you haven't started paying your student loan bills, you have until Oct. 1, 2024, to get back on track. After that, you could face student loan delinquency or default.
Is it too late for loan forgiveness? ›
Student Loan Forgiveness Consolidation Deadline Bumped To April 2024. The Education Department last year approved at least 855,000 borrowers for student loan forgiveness under the Income-Driven Repayment Account Adjustment.
Are we no longer getting student loan forgiveness? ›
The Supreme Court ruled we could not implement pandemic-related student loan debt relief, so we can't use your application from 2022. The new proposed regulations are different, and we're currently working to finalize their terms, including who may receive loan forgiveness.
How will I know if my student loan will be forgiven? ›
If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.
Do all student loans get forgiven after 20 years? ›
If you repay your loans under an IDR plan, any remaining balance on your student loans will be forgiven after you make a certain number of payments over 20 or 25 years. Past periods of repayment, deferment, and forbearance might now count toward IDR forgiveness because of the payment count adjustment.
How to get 100% student loan forgiveness? ›
Borrowers with federal Perkins loans can have up to 100% of their loans canceled if they work in a public service job for five years. In many cases, approved borrowers will see a percentage of their loans discharged incrementally for each year worked.
Why did MOHELA put my account on administrative forbearance? ›
MOHELA administrative forbearance
Because new rules from the Education Department now say that mandatory administrative forbearance counts toward Public Service Loan Forgiveness (PSLF), MOHELA can use this forbearance path to give itself more time to make calculations without hurting borrowers.
Some student-loan borrowers are surprised to find their accounts are suddenly in forbearance. Here's why that might be happening. Some student-loan borrowers are logging into their accounts and seeing it in forbearance. It could be a result of errors the Education Department detected with servicer MOHELA.
Will I get a refund if my student loans are forgiven? ›
If you qualify for student loan forgiveness or discharge in full, and have applied if necessary, you will get a notification that you no longer need to make payments. In some cases, you may even get a refund, depending on the program you applied under.
Who qualifies for student loan forgiveness in 2024? ›
Borrowers with only undergraduate debt would qualify for forgiveness if they first entered repayment 20 years ago (on or before July 1, 2005), and borrowers with any graduate school debt would qualify if they first entered repayment 25 or more years ago (on or before July 1, 2000).
Will they take my taxes for student loans in 2024? ›
Important note: As part of the Fresh Start Program, borrowers with eligible defaulted loans are receiving certain relief measures, including tax refunds (and child tax credits) not being withheld. This relief will continue through at least September 2024.
Do student loans ever age out? ›
Federal student loans go away:
After 10 years — Public Service Loan Forgiveness. After at least 20 years of student loan payments under an income-driven repayment plan — IDR forgiveness and 20-year student loan forgiveness. After 25 years if you borrowed loans for graduate school — 25-year federal loan forgiveness.
Is there a timeframe for student loan forgiveness? ›
These periods could also count toward Public Service Loan Forgiveness, as well. PSLF can shorten the timeframe for student loan forgiveness to as little as 10 years for borrowers who pursue careers in the nonprofit or public sectors.
Is there a deadline to take out student loans? ›
The federal government gives students a deadline of June 30 after the school year in which they need aid. For example, students have a June 30, 2025 FAFSA deadline for the 2024-25 school year.
What is the deadline for the save program? ›
If you're on the SAVE Plan, you will not be able to reenroll in the Pay As You Earn (PAYE) Repayment Plan or the ICR Plan after July 1, 2024. If you make 60 or more payments on the SAVE Plan on or after July 1, 2024, then you will not be able to enroll in the IBR Plan.
