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If you have student loans, there’s an important deadline coming up that could help you get rid of your debt faster. By June 30, you can apply for loan consolidation, which combines multiple federal student loans into one.
This move could lead to quicker debt forgiveness for many borrowers. Let’s break down what you need to know.
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Loan consolidation is when you take multiple federal student loans and combine them into a single new loan. This process can simplify your payments and might help you qualify for forgiveness sooner.
Consolidating your loans under a temporary policy introduced by the Biden administration can offer several benefits:
Let’s say you have been repaying loans since 2004 and took more loans for graduate school in 2018. Normally, you’d have to wait until 2038 for forgiveness on the newer loans. But if you consolidate now, you could qualify for forgiveness much sooner because your repayment period will be based on the oldest loan.
To take advantage of this policy, you need to apply for consolidation by June 30. Missing this deadline means you won’t be able to benefit from the new forgiveness credits.
Consolidating your loans is straightforward:
Some borrowers may see their debt forgiven almost immediately after consolidation, especially those who have been making payments for over 20 years. This includes those enrolled in income-driven repayment plans that offer forgiveness after a set number of years, usually 10, 20, or 25 years.
Consolidating your student loans by June 30 could be a smart move to speed up debt forgiveness. It’s an easy process that could save you a lot of money and stress in the long run. Make sure to take action before the deadline to take full advantage of this opportunity.
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Elena is a seasoned tax consultant with a decade of expertise in income tax management. Graduating with top honors in Finance, she embarked on a career journey focused on simplifying tax complexities. Elena's insightful articles on thecsc.org provide practical guidance to taxpayers.
