The deadline to apply to consolidate many older federal student loans to be included in the one-time payment count adjustment is Tuesday, April 30th.
The one-time payment count adjustment is a big deal. Federal student loan borrowers are supposed to have their remaining loans canceled after 10 to 25 years of payments in the income-driven repayment (IDR) program or 10 years of payments through Public Service Loan Forgiveness (PSLF), but decades of past servicing errors have prevented borrowers from getting credit for all of their time in repayment. This program fixes that and helps make sure borrowers get all of the credit they should toward being debt free. Nearly a million student loan borrowers have already had their loans canceled thanks to this program, and millions more will get closer to having their balances canceled after the adjustment is completed.
Most borrowers are eligible for this credit automatically and will not have to do anything to see their student loan accounts adjusted with this credit. But millions of borrowers with Federal Family Education Loans (FFEL) and Perkins Loans will have to apply to consolidate those loans into the federal Direct Loan program by April 30, 2024 in order to be eligible for this additional credit toward debt relief—don’t miss out!
NCLC has written a lot about the one-time payment count adjustment to make sure as many people as possible get closer to having their student loans canceled. See our previous blog on this issue or read below to learn if you need to apply to consolidate your loans by April 30th to get credit toward loan cancellation.
The Department of Education released a blog in December 2023 with information on how the payment count adjustment is going. Read the Department’s blog, Seven Things to Know About the Student Loan Payment Count Adjustment, for important updates and tips about how you can benefit from the payment count adjustment.
Do I need to consolidate my loans to get additional credit toward debt relief?
If you have privately-held FFEL Loans, Perkins Loans, or Health Education Assistance Loans (HEAL), then you need to apply to consolidate those loans by April 30, 2024 to be eligible for additional credit for loan forgiveness on those loans.
If you have federal student loans that are owned and managed by the Department of Education (including any Direct Loans), you don’t need to do anything to benefit from this adjustment—your account will be updated automatically.
If you took out loans at different times, you may also want to apply to consolidate those loans by April 30th to maximize your credit toward the payment count adjustment. Watch the video below from the Education Debt Consumer Assistance Program for more information.
How do I know if I have FFEL Loans, Perkins Loans, or Health Education Assistance Loans (HEAL) that are privately held?
Log in to your account on studentaid.gov. On your Dashboard click on “View Details.” Scroll down to “Loan Breakdown.” You only need to worry about loans with a balance and can ignore loans that show a $0 balance.
If the name of the loan servicer starts with “Dept. of Ed” or “Default Management Collection System,” then that loan is held (owned) by the federal government and does not need to be consolidated. If the name of the loan servicer starts with either a company’s name or a school’s name, the loan is privately held and needs to be consolidated by April 30th in order to get credit toward debt relief.
What does this look like on studentaid.gov?
See the example photo of what the Loan Breakdown looks like. In this example, the borrower has two loans with outstanding balances, one that is already owned (held) by the Department of Education and doesn’t need to be consolidated, and one that is owned (held) by a private lender that needs to be consolidated by April 30th to get credit toward debt relief.
I have loans I need to consolidate – what do I do next?
To apply for a loan consolidation, go to www.studentaid.gov/loan-consolidation/. The application will walk you through the steps. You can also print a paper application. Borrowers with privately-held FFEL, Perkins, or HEAL loans should apply to consolidate as soon as possible—but no later than April 30, 2024—to get the full benefits of the adjustment. As part of the application, you can also apply for the SAVE plan or another payment plan option. The whole process typically takes less than 30 minutes.
Note that you should only consolidate these loans into the federal Direct Loan program. Refinancing these loans with a private company will make them ineligible for the account adjustment and for IDR and PSLF.
After I consolidate, when will I see credit toward loan forgiveness on my account?
The Department of Education is working to review all borrowers’ loans for the payment count adjustment right now, but it will likely take a long time to finish the process. Some borrowers have already been told their loans are being forgiven through the payment count adjustment. The Department of Education plans to set up a system on studentaid.gov for borrowers to track how much credit they have toward IDR loan cancellation, but this feature is not available now. If you think you should be eligible for forgiveness now or after your loans are consolidated, contact the FSA Ombudsman for help.
If you are pursuing Public Service Loan Forgiveness (PSLF), you can track how many qualifying payments you have on your online account with MOHELA. Remember, you need to submit an Employment Certification Form (ECF) for each public service job you held while in repayment in order to get credit for PSLF. If you recently consolidated your loans to take advantage of the payment count adjustment, it may take a while for your account with MOHELA to be updated to reflect your qualifying payments. We wrote about this issue recently for PSLF borrowers.
See our info sheet on consolidating loans by April 30, 2024 to be eligible for additional credit for debt relief.
