Experts warn those hoping for student debt forgiveness must act soon - as key deadline is just six weeks away

Experts are warning of upcoming deadlines for student loan borrowers hoping to get their debt cancelled. 

The US Department of Education has set April 30 as the final date for consolidating student loans.

This is crucial in order to make sure Americans receive the correct credit for the amount of time they have already spent repaying their debt, which could help bring them closer to the threshold for forgiveness. 

And experts are also pointing to further deadlines later this year which borrowers need to be aware of. 

It comes as the Biden administration announced the latest round of forgiveness Thursday - bringing the total amount of cancelled debt to $144 billion for 4 million Americans.

The Biden administration has so far cancelled $144 billion in student debt for 4 million Americans

April 30, 2024  

As part of the extensive student loan plans brought in in recent months, the Biden administration has introduced a one-time adjustment to help address any inaccuracies in payment counts. 

Historic failures by loan servicers and the Education Department have meant that many Americans have struggled to get the debt erasure they were promised. 

Workers found that some or all of their payments had not been credited toward the threshold for forgiveness. 

For borrowers on an income-driven repayment (IDR) plan, loans can be cancelled after 20 to 25 years, and for those on the Public Service Loan Forgiveness (PSLF) plan, loans can be discharged after 10 years of repayment. 

The one-time adjustment is designed to correct past administrative failures for borrowers on these plans, forgiving their loans if they have been repaying for enough time, or at least give them an accurate picture of their progress going forward. 

Updated payments have so far provided billions in relief for borrowers across the country. 

Many borrowers with federally held loans do not need to do anything, and the adjustment will be made automatically. 

But those with privately held loans must apply to consolidate their loans by April 30 to be eligible for the payment count adjustment. 

The Biden administration has introduced a one-time adjustment to help address any inaccuracies in payment counts

Borrowers can consolidate their loans by visiting the Federal Student Aid website. 

This is applicable to those with Federal Family Education Loans (FFEL), Perkins loans or Health Education Assistance Loans (HEAL).

According to the Consumer Financial Protection Bureau (CFPB), if you have a Parent PLUS loan managed by the Department of Education and have been repaying for at least 25 years, the loan will be automatically cancelled through the one-time adjustment.

But if you have not been paying back for 25 years or more, you should consolidate your loan before April 30. 

To find out what kind of loan you have, visit the Federal Student Aid website. 

July 1, 2024

Kendall Philbrick, creator of personal finance site Babe on a Budget, pointed out that borrowers have until July 1, 2024, to sign up for the IDR plan Pay As You Earn (PAYE). 

Personal finance expert Kendall Philbrick warned of upcoming dates that student loan borrowers need to be aware of

PAYE caps federal student loan payments at 10 percent of your discretionary income and forgives your remaining balance after 20 years of repayment. 

PAYE is one of four income-driven repayment plans which also include Saving on a Valuable Education (SAVE), Income-Based Repayment or Income-Contingent Repayment. 

The SAVE plan is the newest plan, which was introduced by the Biden administration in August 2023.

'For some borrowers, PAYE might be a better option than SAVE,' said Philbrick. 

Typically, PAYE is the best option for Americans who do not expect their income to increase much over time, have grad school debt, and who are married and have two incomes. 

According to Nerdwallet, in most cases, the least confusing way to select an income-driven plan is to let your servicer place you on the plan you qualify for that will have the lowest monthly payment.