- ORIGINAL NEWS
Borrowers need to act by April 30 to qualify for student loan forgiveness
- SUMMARY
Due to a special initiative by the Consumer Financial Protection Bureau, a limited-time opportunity is available for student loan borrowers to explore loan forgiveness.
However, individuals must take action by April 30th to qualify.
Under income-driven repayment plans, borrowers typically make payments based on a percentage of their disposable income.
These payments can be lower than standard repayments and may even be zero if eligible.
After a set number of years (10, 20, or 25, depending on the plan), the remaining debt is generally forgiven.
However, one challenge for borrowers is often having multiple student loans with different timelines for forgiveness.
The Biden administration is now offering a temporary solution to this issue.
Borrowers can consolidate their loans into one larger loan by April 30th.
This consolidation process will count payments made on all the original loans as if they were made on the consolidated loan, potentially leading to faster loan forgiveness.
For example, a borrower with loans taken out in 2004 and 2018, normally facing a 20-year timeline for forgiveness, could potentially qualify for immediate forgiveness on all loans after consolidating by April 30th.
All federal student loans are eligible for consolidation, including FFEL loans, Parent Plus loans, and Perkins loans.
Borrowers can apply for a Direct Consolidation Loan online at StudentAid.gov or through their loan servicer.
To ensure accuracy, it’s recommended to obtain a complete payment history for each loan before consolidating to ensure proper credit is given.
Borrowers can access payment history at StudentAid.gov or request it from their loan servicer.
Consolidation should not increase monthly payments as they are based on income under income-driven repayment plans.
However, it’s important to note that loan servicers may take time to process consolidation requests.
As long as the application is submitted by April 30th, borrowers should qualify, even if processing takes longer.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“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.”
Negative
“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.”