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As April comes to a close, a significant deadline is just hours away for those seeking relief from student loan debt.
The chance for full or partial cancellation of federal student loans is on the horizon, courtesy of a one-time adjustment by the U.S. Department of Education.
But to seize this opportunity, action is required before April 30, 2024.
How to consolidate your student loans
What does this mean for you? If you're a federal student loan borrower, you could potentially see your debt wiped out entirely or receive credit toward cancellation.
However, there's a crucial step: loan consolidation.
Consolidating your loans could pave the way for eligibility, ensuring that more of your payments count toward cancellation.
The Biden administration's initiative aims to alleviate the burden of student debt for millions of Americans, with over 30 million individuals poised to benefit.
The Department of Education estimates that millions will have their debt fully canceled, while others will enjoy significant relief, including the elimination of accrued interest.
Consolidation isn't just about meeting the deadline; it offers additional benefits.
By consolidating your federal student loans into a Federal Direct Consolidation Loan, you gain access to protections like Public Service Loan Forgiveness (PSLF).
While consolidation won't lower your interest rate, it does provide stability by locking in a fixed rate, ensuring your payments remain consistent over time.
Wondering how to proceed?
Visit StudentAid.gov/loan-consolidation to select the loans you wish to consolidate and determine a repayment plan.
Assistance is also available through the Federal Student Aid Information Center.
For certain types of federally managed loans-such as FFEL, Parent PLUS, Perkins, and HEAL Program loans-consolidation is essential to maximize credit toward cancellation.
Through the one-time adjustment, more of your previous payments are counted, potentially fast-tracking your path to loan forgiveness.
The adjustment recognizes payments made since July 1, 1994, including periods of deferment, economic hardship, and forbearance.
This means that even if you don't qualify for cancellation immediately, these adjustments could accelerate your progress, particularly if you're enrolled in an Income Driven Repayment (IDR) program.
Parent PLUS borrowers have specific considerations.
If you have at least 25 years in repayment, your loan may be automatically cancelled.
Otherwise, consolidating before the deadline is crucial to maximize benefits.
Don't let this opportunity slip away.
Act now to consolidate your loans and position yourself for potential debt relief.
Whether you're on the brink of cancellation or seeking to lower your monthly payments, consolidation could be the key to financial freedom.