Time Is Ticking: Consolidate Your Student Loans for Potential Forgiveness

Stephanie Mickelson
BartekSzewczyk / Getty Images
BartekSzewczyk / Getty Images

While April 15 (Tax Day) is on the minds of many Americans, there’s another date that you should be aware of if you have student loans: April 30.

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The U.S. Department of Education is undertaking a student loan payment count adjustment that could result in additional time put toward your payment timeline as well as actual student loan forgiveness.

These payment adjustments seek to “address historical failures in administering student loans,” according to Homeroom, the official blog of the U.S. Department of Education. This program primarily affects borrowers who:

  • Hold William D. Ford Federal Direct Loans (Direct Loans)

  • Are or were on an Income-Driven Repayment (IDR) plan

  • Are in the Public Service Loan Forgiveness (PSLF) program

  • Have a Direct Loan or Federal Family Education Loan (FFEL) program loan and are interested in an IDR plan

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If you fall into one of these borrower categories, the adjustment will more accurately count the payments you’ve made towards your loans, making it so that more payments will be credited towards your total loan repayment. The result will be that many who have been in repayment for 20 or 25 years are able to qualify for IDR forgiveness. If you don’t fall into one of these categories, it may be time to look into consolidating your loans into a Direct Consolidation Loan.

According to Federal Student Aid, payment count adjustments that will count towards IDR forgiveness include:

  • All months in repayment status, regardless of the payments made, loan type or repayment plan

  • 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance

  • any months spent in economic hardship or military deferments in 2013 or later

  • any months spent in any deferment (with the exception of in-school deferment) prior to 2013

  • any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a consolidation loan

Even if borrowers aren’t currently enrolled in an IDR plan, if they made qualifying IDR payments for 20 or 25 years, their loans will be automatically forgiven. And if they overpaid during that time, they will receive a refund.

To take advantage of this program, borrowers who hold commercially managed FFEL, Perkins, Health Education Assistance Loan (HEAL) Program have to apply for a Direct Consolidation Loan by April 30. This could put you on a path towards potential forgiveness, but time is ticking!

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This article originally appeared on GOBankingRates.com: Time Is Ticking: Consolidate Your Student Loans for Potential Forgiveness

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