Key Takeaways: Consolidating Federal Student Loans for Debt Relief

The Department of Education has announced a one-time program that could potentially boost your student loan forgiveness amount, but the deadline to take advantage of this opportunity is quickly approaching. If you have federal student loans that are not currently eligible for forgiveness programs, consolidating them into a new Direct Loan by June 30 could help you qualify for debt relief.

Consolidating your federal student loans allows you to combine multiple loans into one with a fixed interest rate. By enrolling in an income-driven repayment plan, you may be eligible for automatic loan cancellation, interest forgiveness, or other debt relief benefits. This process can also help synchronize your forgiveness date and increase the number of payments that count towards forgiveness.

Financial aid expert Mark Kantrowitz explains that consolidating your loans can be beneficial for many borrowers, but it may not be the right move for everyone. If you have low interest rates on your current federal student loans, your new consolidated rate will be based on a weighted average of the loans you consolidate.

If you miss the June 30 deadline, you can still consolidate your loans, but you may not receive as much credit for past payments. It’s important to weigh the benefits of consolidation and consider how it may affect your monthly payments and potential debt relief.

To consolidate your federal student loans, you can apply online at StudentAid.gov. The application process takes about 30 minutes, and it’s essential to submit your application before the deadline to ensure you qualify for the one-time program. Don’t miss out on this opportunity to potentially maximize your debt relief and streamline your student loan payments.