CALIFORNIA — About 300,000 Californians are facing a looming deadline to apply for student loan forgiveness or lower monthly payments.
The window closes on the one-time offer June 30th. People with loans from 2010 or earlier who previously did not qualify for student loan forgiveness will receive credit for years of repayments.
President Joe Biden’s IDR Account Adjustment has resulted in at least $51 billion in student debt relief to date and is designed to address historic administration problems with income-driven repayment plans.
Borrowers will have to apply to consolidate older loans into one account to reap the most benefits from the adjustment, which is scheduled to be completed by Sept. 1.
The adjustment is automatic for borrowers with Direct or federally managed Federal Family Education Loans, but some borrowers with private Perkins Loans, private FFEL Loans or Health Education Assistance Loans do not automatically qualify.
It typically takes about 60 days to process a Direct Consolidation Loan application and disburse the new loan, government officials said, so in order for the adjustment to apply, borrowers should submit their consolidation application by June 30.
Those who consolidate their accounts within the time frame will earn credit toward all their loans based on the account they have been paying off for the longest amount of time. Only loans in the direct program are eligible for loan forgiveness after 10 to 20 years of payments.
Consolidation could be beneficial to a number of borrowers in different circumstances including:
- Borrowers who have any FFEL loans and are interested in pursuing loan forgiveness through Public Service Loan Forgiveness, even if the loans are already held by the U.S. Department of Education.
- Borrowers who have multiple federal student loans with varying repayment histories
- Borrowers who have Parent PLUS loans may want to consolidate depending on how long their oldest loan has been in repayment.
California debuted a network of nonprofit organizations that aim to help borrowers navigate student loan policies, hurdles and deadlines. Collectively, the Student Loan Empowerment Network has received $7 million in state grants to help borrowers.
The network will offer in-person or phone consultations to handle any questions or confusion about their student loans.
