There's still time (barely) to consolidate student loans for a shot at debt forgiveness

Mass student loan forgiveness was struck down last summer by the Supreme Court, but all hope for debt relief isn't lost.

Nearly 44 million Americans held student loans valued at more than $1.6 trillion at the end of March, according to the New York Federal Reserve.  President Joe Biden has already erased $127 billion in student debt so far for more than 3.5 million borrowers — more than any other president in history -- by tapping existing programs that were previously hard to access for many borrowers seeking relief.

Some of those student loan forgiveness initiatives are approaching key deadlines or cutoff dates -- including one by Dec. 31 -- and require some quick action by you. Other programs will start in 2024, but you should be aware of them now and plan accordingly.

To make sure you don't miss a chance to make a dent in your student debt, we've compiled of list of dates you need to know.

Dec. 31, 2023

If you have a loan that isn't held by the Department of Education, such as a commercially held Federal Family Education Loan (FFEL), school-held Perkins loan, or a Health Education Assistance Loan (HEAL), you’ll need to consolidate your loan into a new Direct Consolidation Loan before Dec. 31, to get credit for that loan under the Income-driven repayment (IDR) account adjustment.

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A one-time IDR account adjustment could change whether certain payments or months are credited toward your loan forgiveness.  Borrowers who work in public service must submit an employment certification form and Public Service Loan Forgiveness application no later than the end of 2023. If borrowers have payments remaining after the review, they’ll need to enroll in an IDR plan. 

So far, nearly 855,000 longtime student loan borrowers are slated for $42 billion worth of relief under this temporary program, the White House said. Even if your loans aren’t automatically forgiven, the account adjustment will move you closer to the end of your repayment period and closer to forgiveness if you sign up for an IDR plan, which typically takes 20 or 25 years of full monthly payments.

2024

If you were on an IDR plan before the payment pause, you’ll have at least 6 months (or until around March 2024) to recertify your income after the payment pause ends. Normally, this must be done each year. However, you may want to recertify for a lower payment if your income has dropped or your family size has increased.

For your payment amount to be adjusted before your first bill, recertify as soon as possible. You can recertify early using the IDR application and select the button next to “Recalculate my monthly payment.”

July 1, 2024

Additional SAVE benefits begin: Undergraduate loans will be cut in half (reduced from 10% to 5% of income above 225% of the poverty line). Borrowers who have undergraduate and graduate loans will pay a weighted average of between 5% and 10% of their income based on the original principal balances of their loans. 

Forgiveness: Borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed. 

Borrowers who consolidated loans will receive credit for a weighted average of payments that count toward forgiveness based upon the principal balance of the loans being consolidated. They will also automatically receive credit toward forgiveness for certain periods of deferment and forbearance. And those debtors can make additional “catch-up” payments to get credit for all other periods of deferment or forbearance. Borrowers who are 75 days late will be automatically enrolled in IDR if they have agreed to allow the Department of Education to securely access their tax information. 

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Sept. 30, 2024

“On-ramp" expires, and unpaid federal student loans become delinquent. The 12-month “on-ramp” from Oct. 1, 2023, through Sept. 30, 2024, means borrowers who missed monthly payments during this time wouldn’t be considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.

This date also coincides with the last day for borrowers to apply for the “Fresh Start” program, which gives borrowers already in default before the pandemic an opportunity to become current.  

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.