Time is running out for borrowers with commercially held student loans. By the end of this month, December 31, there are important actions that need to be taken to ensure eligibility for key repayment adjustments and relief programs. Read on to find out what you need to know.
Consolidate Loans for Payment Adjustment
Borrowers with commercially held student loans must consolidate them to become eligible for a one-time payment adjustment. This adjustment can lead to discharge under their income-driven repayment (IDR) plan. Therefore, initiating the loan consolidation process as soon as possible is crucial. It typically takes 30-60 days to process and become effective, so taking action now is essential.
How to Consolidate Loans
To qualify for the one-time payment adjustment, borrowers with commercially held federal loans must consolidate into a Direct Consolidation Loan. The consolidation process can be initiated from the Federal Student Aid website. Read Also: Changes in Social Security Payment: What You Need to Know
To consolidate your loans, follow these simple steps:
- Prepare necessary documents: Gather necessary documentation, including your FSA ID, a list of the loans you want to consolidate, personal contact information, and two references from individuals who’ve known you for at least three years.
- Visit the official website: Next, visit the Federal Student Aid (FSA) website. You can find the application for loan consolidation under the “How to Repay Your Loans” section.
- Complete and apply: Fill out the application accurately, providing all the necessary details. Once completed, submit your application.
- Wait for evaluation: After submission, your application will undergo evaluation. You’ll continue to make payments on your current loans until the consolidation process is complete unless they’re in deferment or forbearance.
- Review new loan terms: Once your application is approved, the FSA will send you a new loan promissory note with your new loan terms. Review the terms carefully before accepting.
Remember, the loan consolidation process typically takes 30 to 60 days. You’ll receive a notification once the process is complete, and your new repayment plan will start. Keep in mind the December 31st deadline to consolidate your loans and adjust your repayment plan. Therefore, starting the consolidation process as soon as possible is recommended.
Enroll in the Fresh Start Program
For borrowers who defaulted before the payment pause implemented during the pandemic, there is a chance to enroll in the Fresh Start program. This program allows borrowers to reestablish good standing and become eligible for the one-time payment adjustment. Additionally, enrollment in the Fresh Start program opens doors to other benefits such as forbearance, deferment, and income-driven repayment plans.
By transitioning from their current loan servicer to a regular one, they become eligible for the benefits of forbearance, deferment, and income-driven repayment plans. Taking advantage of the Fresh Start program can significantly improve their student loan status. However, staying vigilant and tracking enrollment and payment adjustment deadlines is important. The deadline to enroll in this program is also December 31, so act fast.
Don’t Miss the Deadline
This critical deadline is a turning point for commercially held student loan borrowers. As the end of the year approaches, it is crucial to take action and ensure eligibility for important repayment adjustments and relief programs. Don’t overlook this opportunity to make potentially significant changes to your student loan status.
Act now to secure your financial future. Consolidate your loans, enroll in the Fresh Start program, and stay informed about the latest updates and deadlines. Make the most of the opportunities available to you and take control of your student loan journey.