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Student loan forgiveness update: Key deadline extended by Biden
The Biden administration has extended a key deadline for student loan borrowers hoping to get their debt cancelled.
The US Department of Education had set April 30 as the final date for consolidating student loans. This has now been extened until June 30.
Even though it has been extended, Americans have been told to act now in order to not miss the new deadline.
Combining student loans into one big one federal debt consolidation loan is a required step for graduates with private loans to qualify for forgiveness programs.
In addition, a key factor in determining forgiveness is how many years Americans have been actively paying off their loans.
Depending on the program, this might be ten or 25 years - so having a full history can bring them closer to the threshold for forgiveness too. We explain this fully below.
'The Department is working swiftly to ensure borrowers get credit for every month they've rightfully earned toward forgiveness,' said US Under Secretary of Education James Kvaal.
Biden has so far provided $160 billion in student loan forgiveness for 4.6 million borrowers
As college costs soar, more students turn to loans to fund their degrees. But millions struggle to pay them back in the face of interest that keeps the total high even as payments are made.
Predisident Joe Biden has so far approved $160 billion in forgiveness for 4.6 million borrowers, with the latest round at the start of the month for art students.
What is the deadline for?
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.
For those on the Public Service Loan Forgiveness (PSLF) plan, loans can be discharged after ten years of repayment.
The one-time adjustment is designed to correct past administrative failures for borrowers on these plans,
Getting the correct information can then lead to to the White House 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.
Borrowers can consolidate their loans by visiting the Federal Student Aid website.
The Biden administration on May 1 said it will cancel $6 billion in student loans for people who attended the Art Institutes, a system of for-profit colleges that closed the last of its campuses in 2023 amid accusations of fraud
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.