Some student-loan borrowers now have 4 extra months to benefit from one of Biden's debt relief plans — but they need to take action

• Student-loan borrowers with FFEL loans need to consolidate to benefit from the one-time account adjustment.
• The Education Department extended the deadline for consolidation to April 30, 2024.
• Other borrowers do not need to take any action to benefit from the adjustment.

President Joe Biden's Education Department just gave some student-loan borrowers extra time to benefit from a relief program.

On Monday, Federal Student Aid Director Richard Cordray released a blog post with updated information on the one-time account adjustments for borrowers who have met the payment thresholds for loan forgiveness on income-driven repayment plans and the Public Service Loan Forgiveness program.

Borrowers with federal loans managed by the Education Department do not need to take any action to benefit from the adjustment — Cordray wrote that the department identifies borrowers eligible for forgiveness "at least every two months."

However, those with privately held federal loans through the Federal Family Education Program need to apply for consolidation into the federal direct loan program. While the consolidation deadline was previously the end of 2023, Cordray wrote that the deadline has been extended:

"Borrowers with commercially managed FFEL or Perkins loans should apply to consolidate as soon as possible—but no later than April 30, 2024—to get the full benefits of the adjustment."

Cordray noted that consolidation can take at least 60 days, which is why he recommended FFEL borrowers do so earlier rather than later.

So far, the account adjustments have brought debt cancellation to thousands of borrowers. The first batch of relief went to over 800,000 borrowers in August, and most recently, another 80,000 borrowers saw $5 billion in relief through the account adjustments.

Cordray noted in the Monday blog that by the time the department's full account adjustments are completed in July 2024, borrowers who haven't reached the forgiveness threshold by then will receive an updated payment count to ensure their progress is accurate going forward.

"It may take several weeks for servicers to update their systems after the adjustment," Cordray wrote. "Until the adjustment is fully implemented, most borrowers will not be able to get a count of their IDR progress toward forgiveness from their servicers."

These adjustments come for borrowers just months after federal payments resumed following an over three-year pause. Recent data from the Education Department highlighted the challenge repayment has been for millions of borrowers — 40% of the 22 million borrowers who had bills become due in October missed those payments.

To protect those vulnerable borrowers, the department implemented a 12-month "on-ramp" period, during it won't actively report missed payments to any credit reporting agencies. The department is also in the process of crafting its new plan for student-debt relief under the Higher Education Act, which the public will have the opportunity to submit comments on in the new year.