Tuesday is the deadline to consolidate federal student loans to qualify for a loan cancellation program from President Joe Biden’s administration.
Borrowers have until midnight to combine multiple student loans into one loan with a fixed interest rate requiring one payment per month. The new loan is known as a Direct Consolidation Loan.
Meeting the April 30 deadline will allow some borrowers to qualify for full debt cancellation or to receive credit toward loan forgiveness.
The borrowers who could benefit are those who are on an income-driven repayment plan or who were in the past; people in the Public Service Loan Forgiveness program; or people with Direct or Federal Family Education Loan Program loans held by the Department of Education.
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The following federal loans must be consolidated to be eligible for the one-time loan adjustment: the commercially-held Federal Family Education Loan, Parent PLUS loans, Perkins loans, and Health Education Assistance Loan Program loans.
A Parent PLUS loan that is managed by the Department of Education with at least 25 years or 300 months of repayment will automatically be canceled through the one-time adjustment, the DOE said.
People who have already received forgiveness or paid off their loans are not eligible for a refund of prior payments.
The department will make a one-time adjustment to loans this summer, with all adjustments expected to be made by July 1. Around 3.6 million borrowers could see their loan balances reduced or eliminated, the department said.
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Borrowers can log in to their Federal Student Aid Account here to apply. There is no cost to consolidate student loans into one loan. For additional assistance, the Federal Student Aid Information Center can be reached at 1-800-433-3243.
The Biden administration has approved nearly $144 billion in federal loan forgiveness for nearly 4 million borrowers in total, according to the administration.
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The administration has tried several plans to erase debt since the Supreme Court in June rejected Biden’s student loan forgiveness program, which would have canceled as much as $20,000 in student loan debt for individual borrowers, totaling $430 billion.
Since then, several plans have been introduced to help ease or erase the burden of $1.60 trillion in outstanding federally backed student debt.