Information from the Consumer Financial Protection Bureau
Many student loan borrowers have an opportunity to receive full student loan cancellation or more credit towards cancellation. The U.S. Department of Education will conduct a one-time adjustment this summer, but you may need to take steps to qualify.
The deadline to act is April 30, 2024. Here’s what you need to know; this information is also available as a printable flyer from the Consumer Financial Protection Bureau.
Some borrowers need to consolidate their loans
To get the most credit toward loan cancelation, borrowers with the types of federally managed loans listed below must consolidate them:
- Commercially held Federal Family Education Loan (FFEL)
- Parent PLUS loans
- Perkins loans
- Health Education Assistance Loan (HEAL) Program loans
After you take this step, your new Debt Consolidation Loan is eligible for the one-time adjustment and more of the payments you have made up to this point will be counted toward loan cancellation.
Many borrowers could qualify to have student loans cancelled
The one-time adjustment is designed to count more of the payments you made, so they can be added to the payments required for cancellation. The Department of Education gives you credit towards loan cancellation through this adjustment if your loan is federally managed. The adjustment counts your loan payments made after July 1, 1994, and deferments, economic hardship, and forbearances, in some situations.
This means that through the adjustment you may be able to meet the cancellation requirements that are usually given to loans enrolled in an Income Driven Repayment program (IDR). Most federal student loans already qualify for at least one IDR plan. Through an IDR, loans can be canceled after 10, 20, or 25 years of eligible payments. If you are seeking Public Service Loan Forgiveness (PSLF), these extra periods of payment count toward that program if you meet the other eligibility requirements. PSLF forgiveness can be received after 10 years of eligible payments.
Even if you don’t qualify for cancellation right now, an IDR program could help you lower your monthly payment. Through an IDR program, your monthly payment is based on your income and family size, not your loan balance. You can look into enrolling in an IDR program at any time.
Financial Student Aid can help
You can consolidate your loan, receive loan cancellation, or reduce your monthly payments for free on the Department of Education’s website.