Two highly significant student loan forgiveness application deadlines are rapidly approaching. Some borrowers may have to take certain steps by April 30th in order to qualify for any student loan relief, or at least minimize risks of significant delays.
So far, the Biden administration has approved more than $150 billion in student loan cancellation through a variety of separate initiatives, including temporary programs and waivers. Relief under one of those waivers, called the IDR Account Adjustment, already represents more than a third of that total, making it one of the most significant of President Biden’s student loan forgiveness initiatives. But the account adjustment is set to end this summer, and certain borrowers may need to apply to consolidate their loans before April 30th in order to benefit.
Meanwhile, the Public Service Loan Forgiveness program — which also represents a significant portion of the $150 billion in debt relief approved by the Biden administration — faces a major upcoming deadline on the same date. PSLF is about to undergo an extended processing suspension, during which no PSLF applications will be reviewed. Advocates are encouraging borrowers to submit PSLF forms and take other important steps prior to April 30th.
Here are the details.
April 30th Is Key Student Loan Forgiveness Application Deadline For IDR Account Adjustment
The IDR Account Adjustment is a temporary Biden administration program designed to “fix” longstanding problems with income-driven repayment plans by temporarily waiving certain requirements.
IDR can allow borrowers to get student loan forgiveness after 20 or 25 years in repayment. But administrative problems, confusing rules, forbearance-steering practices, and poor oversight led to many issues that have served as a barrier to relief. The account adjustment is designed to address this by crediting borrowers with time toward their IDR loan forgiveness term for periods that may not have previously counted, such as payments made on other repayment plans, as well as certain periods of deferment and forbearance.The account adjustment has already been a resounding success, with more $49 billion in loan forgiveness approved for nearly a million borrowers.
But the initiative is temporary, and it is winding down this summer. While borrowers with Direct loans and other Education Department-owned federal student loans can benefit from the adjustment automatically, those who have other types of federal loans must apply to consolidate them through the Direct loan program by April 30th.
“If you have commercially held FFEL or any Perkins or HEAL loans, we encourage you to consolidate them by April 30, 2024, to benefit from the payment count adjustment,” according to the department. While the consolidation process can take around 60 days, the application itself must be submitted prior to the deadline for the borrower to receive the benefits associated with the IDR Account Adjustment.
Consolidating loans can also allow borrowers to maximize IDR credit under the account adjustment, because the department says it will credit the new consolidation loan with the highest amount of loan forgiveness “time” based on the underlying loan that has the longest repayment history. Consolidation may also be necessary for non-Direct loan borrowers to receive PSLF credit (which is possible under the adjustment, as well).
“Submitting a consolidation application alone does not guarantee any benefits under the payment count adjustment,” notes the department. “In general, it takes at least 60 days to process a Direct Consolidation Loan application and to disburse the new loan. This means that if you want to consolidate your loan(s) in order to get the benefit of the adjustment, you should submit a loan consolidation application by April 30, 2024.”
April 30th Is Also Key Student Loan Forgiveness Date For PSLF
Separately from the IDR Account Adjustment, the PSLF program is about to undergo a lengthy processing pause. Starting on May 1, no student loan forgiveness applications or employment certifications associated with PSLF will be reviewed or processed until at least July, as the department transitions the PSLF servicing interface from MOHELA to StudentAid.gov
Borrowers may want to submit a PSLF application — either to request loan forgiveness, or to simply update their PSLF qualifying payment count — by April 30th so that it is in the system before the pause begins. While the forms will be highly unlikely to get reviewed or processed prior to August, it could allow for faster processing once the suspension ends, given the anticipated backlog and associated delays that will likely occur once the program gets back up and running again.
“We anticipate substantial PSLF processing delays after the pause ends,” said the National Consumer Law Center in a new blog post covering the suspension. “Borrowers should be prepared for significant delays in processing Employment Certification Forms (ECF), updating PSLF payment counts, and processing loan forgiveness applications for eligible borrowers.”
In addition, borrowers may want to download their current PSLF records from MOHELA before the suspension goes into effect, because they will lose access to their current PSLF information starting on May 1. This includes qualifying employment periods, PSLF payment counts, and month-by-month breakdowns of eligible and ineligible payments.
“It is very likely that some borrowers’ account information, including qualifying payment counts, may be inaccurately reported on studentaid.gov or may not be reported at all for some time after the processing pause,” warned NCLC in the blog post. “We strongly advise borrowers to download all PSLF payment count and tracking information from MOHELA by April 30th, as that information may not be available or accessible on MOHELA’s website during and after the processing pause.”
Additional Key Student Loan Forgiveness Deadline On May 17th
Meanwhile, earlier this week the Biden administration released draft regulations governing a brand new student loan forgiveness plan. This program, if enacted, could provide debt relief to 25 million borrowers through multiple avenues.
With the draft rules formally published, the public now has a 30-day period to submit comments, with a deadline of May 17th. The Education Department “will carefully consider comments received and aims to finalize these rules in time to start delivering relief,” which the administration anticipates happening by the fall, according to a department statement earlier this week.
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