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Student Loan Forgiveness: What Should You Do If You Missed the Loan Consolidation Deadline?

 Student Loan Forgiveness: What Should You Do If You Missed the Loan Consolidation Deadline?

The path to student loan forgiveness has been tumultuous at best, and some borrowers eligible for relief may have missed a key deadline to consolidate their student loans.

Borrowers had until April 30, 2024, to consolidate their federal student loans into one Direct Loan to help maximize their student debt relief. While you can still consolidate your student loans and enroll in an income-driven repayment plan to take advantage of loan forgiveness options, you likely won’t be eligible for the full benefit you could have received prior to this date.

“The April 30 deadline was a deadline to apply for a consolidation as opposed to the date the consolidation was complete,” said Kantrowitz. “They set this date as the deadline because it can take up to 60 days for a consolidation application to be processed.”

There may be a small window of opportunity to maximize your debt relief if you missed the consolidation deadline. But Kantrowitz notes that no official guidelines have been published, so there’s no way to know for certain if applying now will sneak your application in before the 60-day window closes.

If the borrower applies for a consolidation now, and the consolidation is completed quickly, and the borrower is really lucky, maybe the payment account adjustment will still apply. There is no guarantee that this will happen.

With the deadline behind us, here’s what’s next for student loan forgiveness — and what you should do if you missed the consolidation window.

Read more: 25 Million Americans Could Have Student Loan Debt Wiped Out Under Biden’s Latest Plan

Where student debt relief currently stands

There are several ways you might be eligible for student loan forgiveness. If you’re on an income-driven repayment plan like SAVE, you could qualify for debt cancellation after 10 to 25 years of qualifying payments. If you’re a teacher or public service employee, you might be eligible for the Public Service Loan Forgiveness program after you make 120 qualifying loan payments.

More recently, the Biden administration announced its newest plan for broader debt relief in April, which could wipe out the balances for borrowers who have been paying their loans for 20 to 25 years, those eligible for PSLF or Teacher Forgiveness Programs who have not applied and those facing financial hardship. It also seeks to forgive up to $20,000 for those who have seen their balances grow due to runaway interest.

The catch for most of these debt relief programs is that only certain federal student loans qualify for maximum relief. So enrolling in an income-driven repayment plan now might still be helpful.

“You don’t necessarily need to be in an income-driven repayment plan, but there are more options for forgiveness for borrowers who are in an income-driven repayment plan,” said Kantrowitz.

What happens if you missed the loan consolidation deadline?

If you didn’t consolidate your loans and you currently hold Direct Loans, they should still be eligible for debt relief under any federal programs you qualify for. You just might have to wait longer for forgiveness. 

For example, if you had a federal Direct Loan from 2004, it could be canceled this year, since it’s been in repayment for 20 years. However, if you have a second undergraduate student loan you began repaying in 2010, it won’t be eligible for relief until 2030.

Consolidating your loans by the April 30, 2024, deadline could have allowed you to get debt relief for all of your loans sooner. Both would have been consolidated together, with your first qualifying payment starting in 2024.

Can I still consolidate my student loans?

Yes, you can still consolidate your student loans. And if you have an FFEL, HEAL, Perkins or ParentPlus loan, you may want to if you’re trying to get into an income-driven repayment plan that can help you work towards loan forgiveness.

However, unlike consolidating before the April 30 deadline, doing so now is unlikely to apply your payment count on your oldest loan to your new consolidated loan. So, if you have two loans, one that’s been in repayment for 10 years and one for 20 years, it’s not certain what your new payment count will be after consolidation. Your consolidation application may make the cut-off, and your payment count might count as 20 years. But since we’re passed the deadline, don’t count on this happening. 

Instead, your payment account may be averaged. Or, in the worst-case scenario, it could be reset to zero. Some aspects of what happens next may depend on whether the White House’s newest student debt relief plan is blocked.

“It is possible that the US Department of Education will be applying the payment account adjustment on July 1, 2024, to all loans in the Direct Loan program or otherwise held by the US Department of Education,” said Kantrowitz.

But since no official guidelines have been released on what will happen if you consolidate now, it’s better to plan on not receiving the adjusted payment count that could maximize your relief.

If you have ParentPlus loans, you may want to consolidate regardless of the payment count if you’re hoping to get into the SAVE repayment plan. But you’ll need to consolidate your loans twice using a loophole called double consolidation. That loophole ends on July 1, 2025, said Kantrowitz. “Don’t procrastinate. If you miss that deadline, there will be no reprieve”, he added.

When will the latest student loan relief plan be implemented?

Whether you consolidated your student loans or not, if you’re eligible for debt relief under the White House’s latest plan, you could see your balance adjusted later this fall. This adjustment could lower or even erase your total student loan debt.

“The new regulations will go into effect on July 1, 2025, if the final rule is published by Nov. 1, 2024,” said Kantrowitz. “However, the Secretary of Education has the authority to implement new regulations sooner, in some cases, and is likely to do so for the new regulations.”

That’s assuming the plan proceeds as proposed. If the administration faces any roadblocks, it’s possible there will be delays or changes. There is a 30-day public comment period, which ends on May 17, that allows the public to respond to this rule, and the Department of Education must then review and respond.

It’s likely to take the government time to review all of the comments. Currently, more than 24,000 comments have been received, Kantrowitz added.

Read more: Skipping Student Loan Payments: What Happens if You Don’t Pay

What to do if you’re struggling to pay your student loan debt

In the meantime, if you can’t afford to pay your student loan debt, consider enrolling in an income-driven repayment plan. An IDR can help lower your monthly payment. But it will stretch out your repayment timeline, which means you could pay more over time. But a longer repayment timeline may be less of a concern if you’re eligible for debt relief under an IDR.

You can also reach out to your student loan servicer to see if they can lower your monthly repayment amount for a period of time. You might also qualify for forbearance or deferment, which can give you a respite from monthly payments temporarily.

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