[ad_1]
The road to student loan forgiveness has been bumpy at best, and some borrowers eligible for relief may have missed a key deadline for consolidate their student loans.
Borrowers had until April 30, 2024 to consolidate their federal student loans into one Direct Loan to help maximize student debt relief. While you can still consolidate your student loans and enroll in an income-driven repayment plan to take advantage of loan forgiveness options, you likely won’t be eligible for the full compensation you could have received before this date.
With the deadline behind us, here it is what’s next for student loan forgiveness — and what to do if you missed the consolidation window.
Read more: 25 million Americans could be out of student loan debt under Biden’s latest Plan
Where is student debt relief right now
There are several ways you can qualify for student loan forgiveness. If you are on an income-driven repayment plan such as SAVE, you could qualify for debt cancellation after 10 to 25 years of qualifying payments. If you are a teacher or public service employee, you may be entitled to Community Service Loan Forgiveness Program after you make 120 qualifying loan payments.
Most recently, the Biden administration announced its latest plan to broader debt relief in April, which could wipe out balances for borrowers who have been paying off their loans for 20 to 25 years, those eligible for PSLF or Teacher Forgiveness Programs who have not applied, and those facing financial hardship. It also seeks to forgive up to $20,000 for those whose balances have ballooned due to accelerated interest.
The catch to most of these debt relief programs is that only certain federal student loans qualify. If you had a non-eligible federal student loan, consolidating by April 30, 2024 was your chance to make sure all of your loans are eligible for maximum forgiveness.
What happens if you miss the loan consolidation deadline?
If you haven’t consolidated your loans and currently have Direct Loans, they should still be eligible for debt relief under any federal programs you qualify for. You just might have to wait longer for forgiveness.
For example, if you’ve had a federal direct loan since 2004, it could be canceled this year because it’s been in repayment for 20 years. However, if you have a second student loan that you started paying off in 2010, it won’t be eligible for relief until 2030.
Consolidating your loans by the April 30, 2024 deadline could have allowed you to get debt relief on all your loans sooner. Both would be consolidated together, with your first qualifying payment starting in 2024.
Can I still consolidate my student loans?
Yes, you can still consolidate your student loans. And if you have an FFEL, HEAL, Perkins or ParentPlus loan, this option can still be beneficial.
Federal student loans that are not direct loans may not qualify for student debt relief under certain programs. In this case, consolidating them now can help you get partial credit for past payments.
If you have two student loans, one from 2004 and one from 2010, they would be in payment for 20 and 14 years, respectively. If you had consolidated them before the April 30 deadline, your debt may have been completely canceled. Now, if you consolidate, your past repayment schedule will become the average of the two — in this case, 17 years.
So it will take you another three years to get full debt relief under the IDR plan if you qualify. But it’s still better than not consolidating and waiting another six years to hit the forgiveness timeframe for your second loan.
If you don’t qualify for student loan forgiveness and don’t want to sign up for an income-driven repayment plan, it probably won’t make sense to consolidate your student loans. Consolidating now will shift your repayment date and you could end up paying more interest.
When will the last student loan relief be processed?
Whether you’ve consolidated your student loans or not, if you’re eligible for debt relief under the latest White House plan, you could see your balance adjusted later this fall. This adjustment can erase or reduce your total student loan debt.
That’s assuming the plan went ahead as proposed. If the administration faces any hurdles, there may be delays or changes.
Read more: Missing Student Loan Payments: What Happens If You Don’t Pay
What to do if you’re struggling to pay off your student loan debt
In the meantime, if you can’t afford to pay off your student loan debt, consider enrolling in an income-driven repayment plan. An IDR can help lower your monthly payment. But this will extend your repayment schedule, meaning you could end up paying more over time. But the longer repayment term may be less of an issue if you qualify for IDR debt relief.
You can also contact your student loan servicer to see if they can lower your monthly repayment amount over a period of time. You may also be eligible for forbearance or deferment, which can give you a temporary reprieve from monthly payments.
Recommended articles
[ad_2]
