Borrowers have until the end of June to consolidate. (iStock)
In an effort to fix administrative issues that resulted in student loan borrowers not qualifying for forgiveness, the Biden administration announced an extended consolidation deadline for borrowers with certain loans.
Student loan borrowers have been dealing with errors that inaccurately counted their student loan payments toward forgiveness programs like income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF). Within these programs, borrowers can have their remaining debt balances forgiven after they’ve worked in the public service sector for so many years or have paid toward their student loans for a set amount of time, typically 20 to 25 years. The Biden Administration’s fix ensures borrowers get the right number of credits applied towards their payment timeline.
The payment count adjustment is expected to be fully complete by September. This extended timeline gives borrowers with Direct Loans or Federal Family Education Loans (FFEL) until June 30th to consolidate them into a new Direct Consolidation Loan. Previously, borrowers had until April 30th. A consolidation allows borrowers to take advantage of federal forgiveness programs like Biden’s SAVE program, which can lead to partial or complete forgiveness.
"The Department is working swiftly to ensure borrowers get credit for every month they’ve rightfully earned toward forgiveness," U.S. Under Secretary of Education James Kvaal said. "FFEL borrowers should consolidate as soon as possible in order to receive this benefit that has already provided forgiveness to nearly 1 million borrowers."
If you have private student loans, federal relief doesn't apply to you. If you're looking to lower monthly payments and ease the burden of student loan debt, consider refinancing your loans. Quickly and easily check your rate options with Credible.
A LARGE PERCENTAGE OF FIRST-GENERATION STUDENTS HAVE BEEN IMPACTED BY FAFSA CHALLENGES
Republican senators largely oppose Biden’s student loan forgiveness plans
The presidential election draws near, so both President Biden and former President Donald Trump are releasing their plans for future policies. Among them is Biden’s student loan forgiveness plan.
Many Republican senators have released statements against the president’s plan. Sens. Mitt Romney, Mitch McConnell, Ted Cruz, Lindsey Graham, Mike Crapo and Katie Britt all signed a letter addressed to U.S. Department of Education Secretary Miguel Cardona, which details their perceived issues with the president’s plan.
The statements cite higher tax rates for citizens that didn’t choose to take on student loans as one of the main reasons these Republicans don’t want forgiveness passed. Additionally, the senators believe the ruling is outside the Department of Education’s purview.
Sen. Mitt Romney has also joined 18 Republican senators in pushing forward the No Bailouts for Campus Criminals Act.
"The Biden Administration’s student loan relief schemes are unfair and irresponsible—forcing hardworking Americans to pay off debts they never agreed to take on—and I introduced the Student Loan Accountability Act in 2022 to block these schemes. But no one should especially support a taxpayer bailout for students who engage in the criminal behavior we’re seeing on college campuses across the nation right now," said Senator Romney in response to the creation of the act.
The legislation would make any individual convicted of a criminal offense related to protesting on campus ineligible for student debt relief.
If you can qualify for a student loan refinance at a lower rate than you're currently paying, it often makes sense to refinance. You can use Credible to compare student loan refinancing rates from multiple private lenders at once.
A MAJORITY OF STUDENT LOAN BORROWERS ARE WORRIED ABOUT THEIR ABILITY TO REPAY THEIR LOANS
Federal student loan interest rates reach highest point in nearly a decade
Interest rates on federal student loans are rising again for the next school year. The newly announced interest rates are the highest they’ve been in years.
Each loan type has a different interest rate associated with it. Direct federal loans for undergraduates are up from 5.5% to 6.53%. Direct federal loans for graduates are also up to 8.08% from 7.05%. Parent PLUS loans meant for parents have the highest rate at 9.08%.
Any federal student loans made after July will carry the new rates. These rising rates could pose an issue for Biden’s plan to keep the student loan crisis under control. Rising rates often make it more difficult for students to tackle their debts.
It's helpful to use an online resource like Credible to compare fixed and variable rate private loan options from multiple lenders.
PRESIDENT BIDEN ANNOUNCES NEW STUDENT LOAN FORGIVENESS PLANS THAT COULD BENEFIT 23 MILLION AMERICANS
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