June 10, 2024
If you are one of the 3.5 million federal student loan borrowers with one specific type of loan – you’ve got until the end of June to consolidate if you want a shot at this one-time-only debt relief initiative.
Now – this is going to get a little complicated but stick with me. There are three main things you have to know
First – who qualifies? It’s a very specific group. Those who have a non-federally held or privately held student loan that originated through the federal family education loan program or FFEL. That program closed down in 2010.
Second — what is this one-time only debt relief initiative? Well usually borrowers who have private student loans not controlled by the federal government –like some FFEL loans — do not qualify for federal student loan forgiveness. And if you consolidate those loans – usually the payments you already made don’t count towards forgiveness. But in 2022 the education department announced this initiative for privately held FFE: loans. The education department said if you consolidate your old privately-held FFEL loan into a direct loan program that is directly held by the federal government – you can have the payments you’ve already made count towards the forgiveness options of the new loan program you consolidate into. And that will include any months you spent in repayment, no matter your loan type or repayment plan. It will also allow you to count certain months spent in forbearance or deferment.
That means if you’ve been paying for 20 years on a loan that originated in the FFEL program and consolidate, the Education Department will count all those payments you’ve made towards the forgiveness you’re legally entitled to after 20 or 25 years. You can even consolidate your FFEL loan into a direct loan and if you qualify for the public service loan forgiveness program you’ll have all those payments you already made count towards forgiveness after just 10 years.
And third –if you want to do this you need to hurry because there is a deadline in just a few weeks. You only have until June 30th to consolidate if you want to take advantage of this one-time offer of counting your old FFEL payments towards forgiveness. After that you’re out of luck.
Lastly – why is this happening? Well back in 2022 the education department said this was necessary to fix the years of mismanagement by plans like FFEL which had horrible record-keeping, misleading information and miscommunication between the education department and its loan servicers. That left millions of borrowers paying on their loans for much longer than they were required to.
Now – this one-time-only FFEL consolidation initiative has already forgiven the student loans of about 1 million borrowers.
Read more from the Dept. of Education about the June 30th deadline here.
