As the end of June approaches, student loan borrowers have a critical deadline to meet that could potentially lead to quicker debt forgiveness. By applying for loan consolidation before June 30, borrowers with multiple federal student loans can take advantage of a temporary policy that could result in immediate debt relief.
Many student loan borrowers have accumulated multiple education loans over the years, either through repeated borrowing throughout their college careers or by returning to school at various points. This often leads to borrowers being on different timelines for loan forgiveness, especially for those enrolled in income-driven repayment plans with different forgiveness periods.
Under the temporary policy introduced by the Biden administration, borrowers who opt for loan consolidation will receive credit towards all their loans based on the one they have been paying off the longest. Additionally, borrowers will now receive credit for certain periods that were previously not counted, including months spent in deferments or forbearances.
Experts suggest that consolidating student loans while the temporary policy is in effect could be a favorable move for many borrowers. For instance, consolidating before July 1 could accelerate the process of qualifying for loan forgiveness, even for those with lengthy repayment timelines. This means that borrowers could potentially receive debt cancellation much sooner than anticipated.
All federal student loans, including Federal Family Education Loans, Parent Plus loans, and Perkins Loans, are eligible for consolidation. Borrowers can apply for a Direct Consolidation Loan either through StudentAid.gov or by contacting their loan servicer. The application process is said to be quick, typically taking less than 15 minutes to complete.
It’s important to note that consolidating student loans should not result in an increase in monthly payments, as the bill under an income-driven repayment plan is generally based on the borrower’s earnings rather than the total debt amount. The new interest rate for the consolidated loan will be a weighted average of the rates across all the loans being consolidated.
Student loan borrowers have a limited time to take advantage of the benefits offered by the temporary policy on loan consolidation. By acting before the June 30 deadline, borrowers could potentially expedite the process of debt forgiveness and achieve significant relief from their student loan burden. It’s essential for borrowers to understand the implications, eligibility criteria, and application process for loan consolidation to maximize the benefits before time runs out.
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