As the deadline approaches, some student loan borrowers have just two months left to take advantage of a temporary debt relief initiative. Here’s what they need to know and do to benefit from this opportunity.
Limited-Time Debt Cancellation Reform
President Joe Biden’s Education Department announced over the summer that it would assess which borrowers qualify for debt relief based on their repayment history. This evaluation targets borrowers who have made qualifying payments on income-driven repayment plans and Public Service Loan Forgiveness but have not yet received relief.
Deadline and Application Process
The Education Department will assess accounts every other month, with all adjustments expected to be completed by July 1. Borrowers who wish to consolidate their loans to benefit from the adjustment must submit a loan consolidation application by April 30, 2024. The processing time for direct consolidation loan applications is at least 60 days.
Eligibility Criteria
Borrowers eligible for automatic account adjustments must have loans in the federal direct loan program or the Federal Family Education Loan (FFEL) program, with loans held by the Education Department. Borrowers with loans in the FFEL program held by commercial entities must consolidate into the direct loan program to qualify for relief.
Relief Efforts and Impact
Thousands of borrowers have already seen their balances reduced or forgiven through the adjustment process. President Biden recently announced relief for 74,000 borrowers, totaling $5 billion. This relief targets public servants and borrowers who have made at least 20 years of payments on income-driven repayment plans.
Challenges Amidst Relief
The timing of these adjustments coincides with the resumption of federal loan payments after a three-year pause. The transition back into repayment has been challenging, with issues such as delayed billing statements and oversight concerns regarding federal loan servicers.
Future Prospects
While the Education Department works on expanding relief efforts, ongoing negotiations seek to address borrowers’ economic hardships. Stakeholder meetings are underway to draft new relief measures under the Higher Education Act of 1965, aiming to provide additional support to struggling borrowers.
As the deadline looms, student loan borrowers are urged to take action promptly to ensure they can benefit from this temporary debt relief initiative before it expires.
Jade Simon
