More than two weeks after the deadline for federal loan borrowers to seek debt relief passed, the Department of Education has extended the offer, giving millions of borrowers another chance at aid.
The department said Wednesday that borrowers have until June 30 to transfer commercially held education debt (loans from private lenders) under the Federal Family Education Loan Program, or Perkins loans, to new debt held by the Department of Education. announced that it would be necessary to consolidate it into a direct loan. The consolidation is a necessary step for borrowers to receive relief through a large but temporary government forgiveness program aimed at wiping out remaining debt for borrowers who have typically been making payments for at least 20 years. .
“The department is working quickly to ensure that borrowers receive their legitimately earned monthly credits toward forgiveness,” said Education Under Secretary James Kvar. The previous integration deadline was April 30th.
The move is part of the Biden administration's efforts to aggressively cancel education debt through longstanding relief programs and easing bureaucratic hurdles. One of the most vexing challenges is getting loans to borrowers through the Federal Family Education Loan Program, a vestige of the previous federal student loan system.
Before 2010, many federal loans were guaranteed by the government but issued by private financial institutions such as banks and other financial institutions. That year, the government took over the system and began providing direct financing. It currently has $1.4 trillion in debt owed to approximately 38 million people.
However, millions of people still receive loans under the Federal Family Education Loan Program. As of the end of April, there were still 3.5 million federal student loans held by private lenders, according to Department of Education data.
Borrowers with these loans are not eligible for most federal student debt forgiveness programs. However, you can consolidate your loans into new federally owned direct student loans. At StudentAid.gov, you can see what types of loans you have and consolidate them into a new loan.
By consolidating commercially held loans into direct loans, these borrowers can count their past high payments or long forbearance periods as eligible for income-driven repayment programs. eligible for benefits from temporary government programs. This is true even for people who have never participated in the program. .
The temporary program has helped nearly 1 million borrowers eliminate $49 billion in debt, according to the Department of Education. In total, the Biden administration's changes resulted in $160 billion in debt relief for nearly 4.6 million borrowers.
The department also said Wednesday that it will take longer than expected to complete income-based repayment adjustments. The ministry said the process began last summer and was originally scheduled to be completed by July, but is now expected to take until September. Borrowers do not need to apply to have their loans included in the program, as the adjustments will be made automatically by the department.