Borrowers need to act by April 30 to qualify for student loan forgiveness

There’s
a
student
loan
forgiveness
opportunity
available
to
many
borrowers,
but
they’ll
have
to
act
by
April
30
to
qualify,
the
Consumer
Financial
Protection
Bureau

says.

The
U.S.
Department
of
Education
is
conducting
a
one-time
adjustment
of
borrowers’
payments
this
summer,
and
those
who

request
a
consolidation
by
the
end
of
this
month
—
which
will
leave
them
with
one,
larger
loan
—
could
get
their
debt
canceled
immediately
or
sooner
than
they
would
have
otherwise.

“The
one-time
adjustment
is
designed
to
count
more
of
the
payments
you
made,
so
they
can
be
added
to
the
payments
required
for
cancellation,”
the
CFPB
says.

Here’s
what
to
know.

Income-driven
repayment
plans, which
date
to
1994,
set
borrowers’
monthly
payments
based
on
a
share
of
their
discretionary
income.
Those
payments
are
typically
lower
than
under
standard
repayment,
and
can
be
zero
under
some
plans.

Borrowers
typically
get
any
remaining
debt
forgiven
after
10,
20
or
25
years,
depending
on
the
plan.

One
complicating
factor
for
borrowers
in
these
programs
is
that
they
often
have
multiple
loans,
taken
out
at
different
times,
said
higher
education
expert
Mark
Kantrowitz.

“They
get
at
least
one
new
loan
each
year
in
school,
on
average,”
he
said.

That
can
mean
a
borrower
has
multiple
timelines
to
forgiveness,
one
for
each
of
those
loans.

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Now,
the
Biden
administration
is
temporarily
offering
borrowers
the
chance
to
combine
their
loans
and
to
get
credit
going
back
as
far
as
their
first
loan
payment
on
the
oldest
of
their
original
loans
in
that
bundle.

This
could
be
a
good
deal
for
many,
experts
say.

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.

Usually,
a
student
loan
consolidation
restarts
a
borrowers’
forgiveness
timeline,
making
it
a
terrible
move
for
those
working
toward
cancellation.
But
the
Biden
administration
has
changed
that
program
detail
through
April
30.

All
federal
student
loans
are
eligible
for
consolidation,
including
Federal
Family
Education
Loans,
Parent
Plus
loans
and
Perkins
Loans,
Kantrowitz
said.

You
can
apply
for
a

Direct
Consolidation
Loan
at
StudentAid.gov
or
with
your
loan
servicer.

“So
long
as
the
application
is
submitted
by
April
30,
they
should
be
fine,
even
if
the
servicers
take
longer
to
process
it,”
Kantrowitz
said.

Some
borrowers
who
took
out
small
amounts
may
even
be
eligible
for
cancellation
after
as
few
as
10
years’
worth
of
payments,
if
they
enroll
in
the
new
income-driven
repayment
option,
known
as
the

SAVE
plan.

Consolidating
your
loans
shouldn’t
increase
your
monthly
payment,
since
your
bill
under
an
income-driven
repayment
plan
is
based
on
your
earnings
and
not
your
total
debt,
Kantrowitz
said.

The
new
interest
rate
will
be
a
weighted
average
of
the
rates
across
your
loans.

Before
consolidating,
it
may
be
a
good
idea
to
get
a
complete
payment
history
of
each
loan,
so
that
you
can
later
make
sure
you’re
getting
the
full
credit
you’re
entitled
to,
said

Elaine
Rubin,
director
of
corporate
communications
at Edvisors,
which
helps
students
navigate
college
costs
and
borrowing.

You
should
be
able
to
get
a
history
of
your
payments
at

StudentAid.gov
by
looking
into
your
loan
details.
You
can
also
ask
your
servicer
for
a
complete
record.

The
payment
history
counts
when
your
loans
first
entered
repayment,
not
when
the
loan
was
borrowed,
Rubin
said.

If
a
borrower
believes
there
is
an
issue
with
their
payment
count,
they
can
talk
to
their
loan
servicer
or
submit
a
complaint
with
the
Department
of
Education’s Federal
Student
Aid
unit,
she
added.

You
should
never
have
to
pay
a
fee
to
consolidate
your
loan,
the
CFPB
says.
It
is
mostly
scammers
that
would
try
to
get
you
to
do
so.