The Education Department has extended the deadline for federal loan borrowers seeking debt relief, offering a new opportunity for millions of individuals. This extension comes after a deadline passed, leaving borrowers with federally held loans a chance to consolidate their debts under the Federal Family Education Loan Program (FFELP) or Perkins loans into new direct loans, which are managed by the Education Department.
The consolidation process is a crucial step for borrowers aiming to benefit from an expansive government waiver program designed to alleviate remaining debt. Under this program, borrowers who have made payments for a minimum term, typically 20 years, may be eligible for debt forgiveness.
James Kvaal, the under secretary of education, emphasized the department’s commitment to ensuring borrowers receive credit for every qualifying month toward forgiveness. The original deadline for loan consolidation was April 30, but it has now been extended to June 30.
This initiative is part of the Biden administration’s broader efforts to address education debt by streamlining relief programs and reducing bureaucratic obstacles. A significant challenge has been reaching borrowers with loans under the FFELP, a legacy of the previous federal student loan system.
Prior to 2010, federal loans were often issued by private lenders, but the government subsequently transitioned to direct lending. Despite this shift, millions of borrowers still have loans under the FFELP. As of April’s end, approximately 3.5 million federal student loans remained with private lenders.
Borrowers with these loans are generally ineligible for federal debt forgiveness programs, but they can consolidate their loans into new direct student loans, making them eligible for relief initiatives. The consolidation process allows borrowers to benefit from a temporary government program that considers past payments or periods of forbearance as qualifying ones for income-driven repayment programs.
Since the inception of this temporary program, nearly one million borrowers have had $49 billion of debt eliminated. Overall, the Biden administration’s measures have resulted in $160 billion in debt reduction for nearly 4.6 million borrowers.
Additionally, the Education Department announced a delay in the completion of income-driven repayment adjustments, extending the timeline to September instead of the previously anticipated July. This process, initiated last summer, automatically adjusts borrowers’ loans without requiring them to apply for inclusion in the program.
