Eligible Borrowers Must Act by April for Student Loan Forgiveness

After facing setbacks with student loan forgiveness plans, the Biden administration is focusing on another strategy to provide relief. The Education Department is currently reviewing the payment history of long-term borrowers who should have had their debt eliminated by now. This includes borrowers with income-driven repayment plans and those working in public sector jobs.

According to a federal watchdog, the tracking of payments made by borrowers in income-driven repayment plans has been inadequate, which has negatively impacted those who should have qualified for debt forgiveness.

As a result of this review, there has been a reassessment of the number of payments made by certain borrowers with Direct or Federal Family Education Loans (FFEL). This has led to the cancellation of $44 billion in debt for over 900,000 individuals, as confirmed by Richard Cordray, the chief operating officer of the Federal Student Aid Office.

In a recent blog post, Cordray emphasized that the agency’s efforts are ongoing and further forgiveness opportunities are still available. The review is expected to be completed by July, and borrowers who have overpaid will receive refunds.

Consolidating loans can extend the chance of receiving debt forgiveness

Loan consolidation is necessary for one-time account adjustment

However, it is important to note that borrowers with loans held by entities other than the Education Department, such as commercial Federal Family Education Loans (FFEL), school-held Perkins loans, or Health Education Assistance Loans (HEAL), must consolidate their loans into a new Direct Consolidation Loan by April 30, 2024. This consolidation is essential to be considered for the payment review and potential account adjustment.

The initial deadline of December 31 has been extended.

To determine the type of loan one has, Cordray provided a simple guideline: Visit the StudentAid.gov website and log into your account. Access the “Loan Breakdown” section on your dashboard to view a list of your loans. Loans starting with “Direct” are Direct Loans, loans starting with “FFEL” are Federal Family Education Loan Program loans, and loans with “Perkins” in their name are Perkins Loans. If your servicer’s name begins with “Dept. of Ed” or “Default Management Collection System,” it means your FFEL or Perkins loan is already held by the Education Department.

Cordray also mentioned that even borrowers with Parent PLUS loans can benefit if they have been in repayment for at least 25 years. They must consolidate their loans by the end of April.

Positive outcome: More than 804,000 borrowers finally receive student loan debt forgiveness after decades of payments