Last Call: This Key Student Loan Forgiveness Deadline Ends Today

If you have non-eligible federal student loans debt relief programstoday is your last chance to increase your forgiveness amount.

The Department of Education is reviewing past student loan payments as part of a one-time adjustment. This adjustment may increase the number of your payments to qualify for forgiveness earlier under a qualified income-based repayment plan or other program, such as Public Service Loan Forgiveness. Consolidating before June 30 can help apply these benefits to federal loans that were previously ineligible for student forgiveness programs.

There is a lot of confusion in the news right now about student loans. With parts of the Biden administration SAVE repayment plan pending, you may be wondering if it’s still worth consolidating your student loans.

Experts say yes.

“The consolidation deadline for the one-time IDR adjustment is not affected by the court ruling,” it said Elaine Rubin, higher education finance and policy expert and director of corporate communications for Edvisors. “The US Department of Education will still count eligible payments to qualify borrowers.”

While consolidation will benefit most borrowers, it’s not the right move for everyone. Here’s how to find out if this one-time consolidation option can maximize your debt relief and if you should consider it.

Read more: If you have defaulted on your student loans, you may qualify for this debt relief program

What is a student loan consolidation?

Student loan debt consolidation is similar to refinancing—it allows you to combine your existing federal student loans into a new loan with a fixed interest rate.

Why would you want to do this? If you have FFELP, Perkins, and other indirect federal student loans, they may not be eligible for forgiveness programs. By consolidating them into a new Direct Loan and opting into an income-driven repayment plan, you may qualify for automatic loan cancellation, interest forgiveness or other debt relief benefits.

If you are eligible for an IDR plan and have made payments for 20-25 years, your entire balance can be simplified automatically.

There are other benefits to consolidating loans. Having one student loan to keep track of instead of many can also make payments easier to manage. Depending on the payment plan you choose, a consolidation loan can lower your monthly payments but also extend your repayment period. But if you’re eligible for post-consolidation forgiveness, this may not be too much of a concern.

Even if you already have direct loans, you may benefit from consolidating if you have more than one with different start dates, said Mark Kantrowitz, a financial aid expert and member of CNET Money Expert Review Board.

Read more: Have you defaulted on your student loans? You may be eligible for this debt relief program

Will my interest rate go up if I consolidate my student loans?

If you currently have low interest rates on your federal student loans, you won’t have to worry about your new consolidated rate going up—in most cases.

The interest rate on your new direct consolidation loan will be based on the weighted average of the loans you are consolidating and will be rounded up to the next 1/8 of 1%, according to Federal Student Aidthe official Department of Education website for student loans.

However, there is one exception. If you have an FFELP loan, you may lose some consolidation benefits. “The main problem is borrowers who have a big reduction in interest rates from the FFELP lender,” Kantrowitz said. “These discounts are provided by the lender and will disappear if you consolidate the loans.”

You don’t have to consolidate all of your loans, so you can exclude your FFELP loans if you want to keep your current discount. You’ll need to consider whether you qualify for forgiveness and how consolidating might affect your monthly student loan payment to decide if consolidating is right for you.

I don’t know if I’m eligible for student loan forgiveness. Should I still consolidate my loans?

For many borrowers, consolidating your federal student loans will help lower your monthly payment and can maximize your potential debt relief. If you currently have federal student loans that are not Direct Loans, this can be especially helpful. Consolidating can also help you lock in a fixed interest rate if any of your federal student loans have a variable rate.

The the newest student loan forgiveness program takes into account the date of your first student loan payment. Consolidating loans helps ensure you get credit for your new direct loan starting with the earlier loan payment date.

So let’s say you graduated from college and made your first federal student loan payment in 2004. You later went back to grad school and started paying off those loans in 2010. Under a repayment plan , income-driven, with a 20-year path to forgiveness, you may be eligible to have your 2004 loans forgiven this year. But by consolidating your newer loans with your older ones into one new direct loan, your entire balance could be wiped out this year.

Even if you’re a recent graduate, consolidating your federal loans and enrolling in an IDR can help you access forgiveness sooner. And if you only have one student loan, if it’s not a direct loan, you may also benefit from consolidation.

But if you don’t qualify for debt relief, it may not make sense to go through this step. “If you are not currently pursuing any type of forgiveness (eg, even an IDR forgiveness) and expect never to pursue forgiveness, then you don’t need to,” Kantrowitz said.

Will the deadline be extended to June 30?

Although the Department of Education extended the loan consolidation deadline from April 30 to June 30 this spring, experts don’t expect it to be pushed back again.

“The consolidation extension has not changed and is not expected to change or be extended further,” Rubin said. If you can benefit from consolidating your loans, you’ll want to apply soon.

How to consolidate your student loans

You can consolidate your federal student loans online at StudentAid.gov. You will need to submit your application before midnight local time on June 30 to meet the deadline. You can consolidate after that date, but you’ll miss out on some benefits.

To complete the application, you will need a Federal Student Aid ID, some personal information, financial information, and loan information to complete the application. The FSA website says it takes around 30 minutes to complete the application to consolidate your loans.

You can fill out the application now at studentaid.gov/loan-consolidation.

Once you apply, it can take up to 60 days for your consolidation to be processed, Kantrowitz said. Meanwhile, you may see your student loan payments drop to zero. Don’t panic if this happens. It just means your edit count is being worked on.

What happens if you miss the deadline?

If you consolidate your loans after the June 30 deadline, you can still get credit for past payments made on direct loans. But you may not get as much credit. Instead, your number of payments will be based on a weighted average or may be reset. But you can still access a debt relief program.