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Student loan debt relief on way in Arkansas

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Monday, March 25, 2024   

Student-loan borrowers in Arkansas and nationwide could have their debt reduced or eliminated through a new one-time adjustment by the U.S. Department of Education.

The department will give Arkansans credit toward loan cancellation through the adjustment if the loan is federally managed.

Cora Hume, attorney for the Consumer Financial Protection Bureau, said the adjustment is designed to count more of the payments made, so they can be added to the payments required for cancellation. Hume pointed out the adjustment counts loan payments made after July 1, 1994, and in some situations, deferments, economic hardship and forbearances.

"The three loans that must be consolidated to receive this payment-count adjustment are the commercially managed Federal Family Education Loan, Health Education Assistance loans and Perkins loans," Hume outlined. "Another loan that's sort of a quasi for consolidation are Parent PLUS loans."

Hume noted borrowers will need to consolidate their loans by April 30 to take advantage of the potentially lower monthly payments. In Arkansas, more than 134,000 borrowers aged 25 to 34 owe an average of more than $29,000.

Hume emphasized student loan debt does not discriminate, and their research showed 2.7 million older borrowers owed an average of $41,000 in federal student loans in 2023. She added between 2004 and 2022, there was a ninefold increase in the number of older borrowers with student loan debt.

"Thirty-two percent of these older borrowers are struggling to pay their bills," Hume reported. "In terms of this adjustment, we know that 62+ borrowers are more likely to need consolidation to maximize the benefit of this one-time pay count adjustments."

Hume acknowledged more than 1 million senior citizens are not in the direct-loan program and hold an average of more than $29,000 in debt from their college days. She recommended borrowers visit StudentAid.gov/loan-consolidation to find out if they are eligible for the significant adjustment.

Support for this reporting was provided by Lumina Foundation.


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