Student-loan borrowers just got 2 extra months to benefit from a temporary debt relief reform

• The Education Department extended the deadline for student-loan borrowers to benefit from account adjustments.

• Borrowers now have until June 30 to consolidate their loans, giving them an extra 60 days.

• The department expects adjustments to be fully implemented in September.

President Joe Biden's Education Department is giving student-loan borrowers more time to get closer to debt cancellation.

On Wednesday, the Education Department announced that it's extending the deadline for borrowers to benefit from the one-time account adjustments. These adjustments are intended to bring payment progress up to date for those on income-driven repayment plans and Public Service Loan Forgiveness.

To receive the account adjustment automatically, borrowers must be in the federal direct loan program or have federally held loans in the Federal Family Education Loan program. Borrowers without those types of loans previously had until April 30 to consolidate into one of those programs to benefit, but now, the department is extending that deadline to June 30.

"The Department is working swiftly to ensure borrowers get credit for every month they've rightfully earned toward forgiveness," Under Secretary of Education James Kvaal said in a statement. "FFEL borrowers should consolidate as soon as possible in order to receive this benefit that has already provided forgiveness to nearly 1 million borrowers."

The department wrote in prior guidance that it could take at least 60 days to process consolidation applications, which is why it recommends borrowers do so as early as possible to benefit from the adjustment. Borrowers can apply for consolidation on the Federal Student Aid website here.

According to the department, adjustments will be fully implemented in September 2024, after which borrowers should see "a full and accurate count of their progress toward loan forgiveness."

Borrowers in PSLF can also get credit toward the program for any months covered by the account adjustments as long as they continue to certify that they work for a qualifying nonprofit or government employer.

The adjustments began in August 2023 following evidence that servicers were not accurately tracking borrowers' payment progress, causing some of them to miss out on loan forgiveness despite completing their qualifying payments. Since the adjustments began, according to the department, 996,000 borrowers have received $49.2 billion in debt relief.

Along with the account adjustments, the Education Department is also implementing relief through the SAVE income-driven repayment plan using a provision that cancels remaining balances for borrowers with an original balance of $12,000 or less and makes as few as 10 years of qualifying payments.

More broadly, the department is working to implement its broader version of student-debt relief after the Supreme Court struck its first plan down. The public comment period for the new plan — expected to benefit over 30 million borrowers — ends on Friday, after which the department will move toward final implementation as early as this fall.

Read the original article on Business Insider