The US Department of Education has decided to extend the Biden Student loan forgiveness deadline until June 30. This could lead to quicker loan forgiveness, with the possibility of some borrowers getting their debt canceled immediately.
The New Biden Student Loan Forgiveness Deadline
Before, the Biden Student loan forgiveness deadline was April 30 to be eligible for the Biden administration’s account adjustment. US Under Secretary of Education James Kvaal said on the Biden Student loan forgiveness deadline recently said that that the Department is moving quickly to make sure borrowers are receiving credit for every month they have earned toward forgiveness.
Until June 30, borrowers on an income-driven repayment plan who consolidate will receive a one-time adjustment on their payment count. This means they will earn credit towards all their loans based on the ones they have been paying for the longest. They will also be eligible for certain periods, like months in deferments or forbearances that did not count before.
Borrowers in the Public Service Loan Forgiveness program can also benefit from the payment count adjustment if they certify their qualifying employment for those months. This adjustment fixes long-standing issues for student loan borrowers.
History of the Biden Forgiveness Loan Plan
In 2022, the Biden administration announced a review of accounts for people in income-driven repayment plans, which are designed to eventually cancel debt after some time.
After the US Government Accountability Office discovered issues in a 2022 report, the Biden administration pledged to address the concerns. Additionally, the Consumer Financial Protection Bureau found that borrowers were sometimes pushed into costly forbearances, where interest would add up and progress toward debt forgiveness would stop.
Education experts say that consolidating student loans typically resets the forgiveness timeline. This could be harmful for borrowers who are looking forward to loan cancellation.
Consolidating now to benefit from the temporary payment count adjustment is particularly advantageous for borrowers with long-standing loan repayments and those with multiple loans from various periods. This move could lead to the forgiveness of all those loans in the near future.
For example, suppose a borrower finished college in 2004 and got more loans for a graduate degree in 2018, and is currently repaying under an income-driven plan set for a 20-year forgiveness timeline. In that case, experts suggest that loan consolidation could help them qualify for forgiveness on all those loans, which would typically require waiting another 14 years for complete relief.
If you are not sure whether loan consolidation could help you, it is good to understand where you stand. Jane Fox, the chair of the Legal Aid Society’s union, told everyone to take a moment to find out. Loan consolidation is a simple step, through a quick phone call or by checking a website, that could lead to the complete cancellation of your student debt.
Mark Kantrowitz, a higher education expert, talking about the Biden Student loan forgiveness deadline, said all the federal loans, such as Federal Family Education Loans, Parent Plus loans, and Perkins Loans, are eligible for consolidation. Kantrowitz added if a borrower ends up with more payments than necessary for forgiveness, the extra payments may be refunded in certain situations.
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