Student Loan Forgiveness Deadline: On May 15, the Department of Education extended the deadline for consolidating federal student loans to maximize debt reduction. Consolidating your federal debts could speed up the forgiveness of your student loans if you qualify for it under an existing program or the White House’s most recent plan.
Now, you have until June 30 to combine all of your federal loans into a single new loan. FFELP, Perkins, and other non-direct loans can be converted into direct loans with higher benefits for debt relief through consolidation. Additionally, it can combine several loans with various payback schedules into a single monthly payment with a single deadline.
According to the New York Times, James Kvaal, the under secretary of education, stated, “The department is working swiftly to ensure borrowers get credit for every month they’ve rightfully earned toward forgiveness.” The prior consolidation deadline was April 30.
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This action is a component of the Biden administration’s aggressive plan to eliminate student loan debt by removing bureaucratic obstacles and extending existing relief programs. One of the hardest things to do is get in touch with people who have debts through the government Family Education Loan Program, which is a holdover from the old government student loan system.
Before 2010, the government insured a large number of federal loans made by private lenders like banks and other financial institutions. In that year, the government took control of the system and started directly lending money; as a result, it currently owes $1.4 trillion for loans to around 38 million borrowers.
Still, millions of Americans have loans obtained through the Federal Family Education Loan Program. Data from the Education Department shows that 3.5 million federal student loans were still in the hands of private lenders as of the end of April.
Most federal student loan forgiveness programs are not available to borrowers holding those loans. They have the option of combining the loans into a single, federally controlled direct student loan. At StudentAid.gov, borrowers can view the type of loan they currently have and consolidate into a new one.
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When commercially held loans are combined into direct loans, the borrowers become qualified for a short-term government program that allows many previous payments, or extended periods of forbearance, to count toward income-driven repayment plans, even if the borrowers never participated in them.
According to the Education Department, nearly one million debtors have had $49 billion in debt forgiven through that pilot program. Almost 4.6 million debtors have had $160 billion in debt eliminated as a result of the Biden administration’s reforms.
