Direct Student Loan Consolidations
Borrowers Currently Enrolled in school can no longer Consolidate Their Loans. The Higher Education Reconciliation Act of 2005 eliminated the provision that allowed a FFEL or Direct Student Loan borrower who is enrolled in school on at least a half-time basis to request to enter repayment early on his or her Stafford Loans if the lender approves. Repayment is now defined as not beginning until 6 months and one day after the date the student ceases to carry at least one-half the normal full- time academic workload, as determined by the school. Therefore, a FFEL or Direct Student Loan borrower who is still enrolled in school at least half time may no longer request to enter repayment early to apply for a FFEL or Direct Consolidation Loan. To apply for a Direct Loan Consolidation or a FFEL Consolidation the borrower must contact the lender and complete an application. Most lenders provide borrowers with the ability to apply on-line or request an application over the telephone. Once an application is completed and submitted, the lender will request information from the borrower’s other lenders or from its own system to determine the amounts outstanding on the borrowers loans. The borrower will then receive notification about the direct student loan consolidation, normal consumer disclosures, the amount owed, and if appropriate, where to make payments. FFEL Consolidation Loan Weighted Average Interest Rate are fixed interest rates that are based on the weighted average of the interest rates on the loans being consolidated. A lender can provide a new consolidation loan borrower with the lowest statutory weighted average interest rate for loans by using the lower of the weighted average of the interest rates on the loans being consolidated as of July 1 or the date the lender received the borrower’s consolidation loan application. The lender should apply a consistent method of determining when an application is received. Most federal education loans are eligible for consolidation, including subsidized and unsubsidized Direct and FFEL Stafford Loans, SLS, Federal Perkins Loans, Federal Nursing Loans, and Health Education Assistance Loans. PLUS Loan borrowers (parent and graduate/professional degree students) can also consolidate their loans. Private education loans are not eligible for consolidation. To obtain a complete list of the federal student loans that can be consolidated Contact the Department of Education Financial Aid office. You can reach them by calling 1-800-557-7392. TTY users may call 1-800-557-7395. Or visit loanconsolidation.ed.gov.
Contact a participating FFEL lender if you are applying for a FFEL Consolidation Loan. If you do not know whom your FFEL lender is, please call 1-800-433-3243 for assistance.
Eligibility rules. All FFEL and Direct Stafford Loan borrowers are eligible to consolidate after they graduate, leave school, or drop below half-time enrollment.
PLUS loans are eligible for consolidation once they are fully disbursed. Borrowers who are delinquent or in default must meet certain requirements before they may consolidate their loans. Contact your loan holder for more information. To be eligible for a William D. Ford Direct Student Loan Consolidation Loan, you must have at least one of the following: 1. A Direct Stafford subsidized or unsubsidized loan that will be included in the Consolidation loan; or 2. Have at least one Federal Family Education Loan (FFEL) program subsidized or unsubsidized loan.
If your current loan holder does not offer a Consolidation Loan or a Consolidation Loan with Income Sensitive Repayment terms acceptable to you, and you are eligible for Income Contingent Repayment, you may apply for a Direct Student Loan Consolidation. In addition, if you have more than one FFEL loan, you may apply for a Consolidation Loan with any of your FFEL loan holders or through the Direct Consolidation Loan Program.
Borrowers who obtain a Direct Student Loan Consolidation or a FFEL Consolidation Loan while they are in the grace period on any loan that will be included in the new Consolidation Loan, or who will include one or more Perkins Loans in the new Consolidation Loan, are advised that the grace period on those loans will be immediately terminated (e.g., you will lose the benefit of having a grace period before repayment would begin).
Note that borrowers with one or more Direct Loans, including Consolidation Loans, can also consolidate under the FFEL Consolidation Loan Program if they choose.
