A crucial deadline for federal student loan borrowers to be eligible for the full cancellation of their debt through a one-time U.S. Department of Education payment-count adjustment is quickly approaching.
Students hoping to get their debt canceled—or to receive credits toward loan forgiveness—must first submit a loan consolidation application by Tuesday, April 30.
The Department of Education is currently conducting an adjustment that is supposed to more accurately reflect borrowers’ payment counts. As part of this recount, more than 3.6 million William D. Ford Federal Direct Loan Program borrowers will receive at least three years of credit toward loan forgiveness this summer, while many will have their loans forgiven automatically.
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Borrowers with commercially held Federal Family Education Loan (FFEL), Parent PLUS loans, Perkins loans and Health Education Assistance Loan (HEAL) Program loans must consolidate their loans to be eligible for the adjustment. Borrowers can consolidate their loans for free on the Department of Education’s website.
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If you are not sure what kind of loan you have, you can check on the StudentAid.gov website or call the U.S. Department of Education’s Federal Student Aid Information Center at 1-800-433-3243.
According to the department, it takes at least 60 days to process a Direct Consolidation Loan application and to disburse the new loan.
The recount, which looks at borrowers’ loan payments made after July 1, 1994, as well as deferments, economic hardship and forbearances in some situations, is expected to be completed by July 1, 2024.
The average total student loan debt, which includes federal and private loans, amounts to $40,505 in 2024, according to data reported by Insider Monkey. Federal student loans were on average $35,210 per borrower.
The Biden administration has aimed to cancel student loan debt for millions of borrowers—one of his more prominent campaign promises. But, in the summer of 2023, the Supreme Court struck down President Joe Biden’s plan to deliver debt relief to millions of Americans. The justices ruled 6-3 that Biden had overstepped his executive authority by deciding to eliminate up to $10,000 in federal student loan debt for borrowers making less than $125,000 ($250,000 for couples filing jointly) and up to $20,000 for Pell Grant recipients.
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The Biden administration proceeded to find workarounds in order to deliver on the president’s campaign promise. It has approved $146 billion in student debt relief for over 4 million Americans through more than two dozen executive actions, said the White House earlier this month. It also announced the addition of new plans to cancel student debt for tens of millions of Americans which, if implemented, would provide debt relief to more than 30 million Americans.
If finalized, the plans, announced on April 8, would start being implemented this fall, when the Biden administration would begin canceling up to $20,000 in interest for millions of borrowers and completely forgive the debt of millions others.
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